IYR, ZNGA Options – Unusual Trading Activity – July 26, 2013
This week we’re taking a look at unusual options trading activity in iShares US Real Estate Fund (IYR) and Zynga (ZNGA).
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 US Real Estate Fund (IYR)
According to at least one trader, there’s going to be a floor on how far the real estate market will drop over the next couple months.
Popular real estate ETF, IYR, is currently trading for $67.96 per share. The ETF is 10% below its 52-week high of $75.51 and 15% above the 52-week low of $59.04.
A trader sold the August $63 puts for $0.16 and bought the September $66 puts for $1.19. Most likely, the trader is closing the August position for a big profit and rolling it out to September at a higher strike.
Selling puts in this manner will be successful as long as the stock price is above $66 by September expiration. However, a trader can easily lock in profits before hand if the underlying moves higher –which was the case in this trade’s August position.
Zynga (ZNGA)
A strategist is betting that mobile/online game maker ZNGA is going to be experiencing volatility over the next few weeks.
ZNGA is currently trading at exactly $3.50. The shares are 32% below the 52-week high of $5.19 and 67% above the 52-week low of $2.09.
The trader bought the August $3.50 calls and the $3.50 puts for $0.29 each. This type of trade is called a straddle. He or she paid a total of $0.58 for the straddle, which was executed around 5,000 times.
The trade makes money if the stock closes either $0.58 higher or lower by expiration. So, the trader believes ZNGA is going to move one way or another by quite a bit by August 17th.
So far, the trade appears to be in good shape. As of this writing, ZNGA has dropped $0.50 to $3.00 after hours following the company’s earnings release. In other words, the straddle is already almost a winner!
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
