EWJ, AMD Options – Unusual Trading Activity – January 8, 2014

| January 8, 2014 | 0 Comments

Unusual Trading VolumeThis week we’re taking a look at unusual options trading activity in iShares MSCI Japan Index ETF (EWJ) and Advanced Micro Devices (AMD).

As many of you know, unusual options volume can be a valuable indicator as to what traders are thinking, and more importantly, where these stocks are heading in the short-term.

This is something professional options traders pay a lot of attention to, and for good reason…  Unusual options activity can “tip off” big moves in a stock, either up or down.

So let’s take a look at some ‘interesting’ activity that caught our eye this week:

iShares MSCI Japan Index ETF (EWJ)

At least one large trader doesn’t expect much action in Japanese stocks through March.

EWJ, a popular Japan stock fund, is currently trading for $12.02.  The share price is 27% above the 52-week low of $9.48 and is just 2% below the 52-week high of $12.29.

This week, a buy write trade occurred in EWJ options which consisted of short puts and short stock.  On the options side, 50,000 March 12 puts were sold for $0.38.  These puts were sold against short stock.

Basically, a buy write such as this (with the stock trading right at the short put strike) suggests the trader doesn’t believe there will be much action prior to March expiration.  Profit will be maximized if EWJ closes right at $12 at expiration.

Advanced Micro Devices (AMD)

Options action has been bullish this week in semiconductor company Advanced Micro Devices.

AMD is trading at $4.18.  The shares are 85% above the 52-week low of $2.26 and are 10% below the 52-week high of $4.65.

In one trade, a trader sold over 6,000 February 4 puts and took in $0.25 per contract.  This is clearly an opening trade as open interest on the strike with just 988 prior to the sale.

This is a moderately bullish play because the trader holds on to the entire premium if the stock closes at or above $4 at February expiration.  While 25 cents may not seem like a lot to gain for a stock trading just 18 cents above the short strike, AMD would have to drop 10% for this trade to start losing money.

More Options Ideas…

That wraps up this week’s unusual options trading and volume…

Keep in mind, there’s a lot more unusual options activity going on than what we discuss here.

We just try to bring you what we feel are the most significant ones– and the ones you might actually be able to make some money on!

So keep an eye on your email inbox… we have a lot more options trading ideas coming your way!

Yours in Profit,

Gordon Lewis


Category: Unusual Options Trading Activity

About the Author ()

Gordon Lewis is the Chief Investment Strategist and editor for the popular daily newsletter – Options Trading Research. He’s also editor of our dynamic theme-based options trading service, Advanced Options Adviser, and one of the key analysts behind the highly successful Options Trading Wire.