JNK, OIH Options – Unusual Trading Activity – June 16, 2014
This week we’re taking a look at unusual options trading activity in SPDR Barclays Capital High Yield Bond ETF (JNK) and Market Vectors Oil Services ETF (OIH).
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:
SPDR Barclays Capital High Yield Bond Fund (JNK)
A trade in JNK suggests there could be some downside ahead.
JNK, a popular junk bond ETF, is currently trading for $41.58. The price is 15% above the 52-week low of $36.02 and is just a fraction of a percent below the previous 52-week high of $41.60.
The trade in question was a large purchase of puts. The September 41 puts were bought 5,000 times for $0.70. Open interest was just about 3,500 prior to the trade.
A put purchase like this could be one of two things. First, it could be a speculative play on the downside – junk bonds have been on quite a tear lately. Or, it could be a hedge against a long junk bond position.
Market Vectors Oil Services ETF (OIH)
Despite the jump in the price of crude oil, traders are betting on the downside in OIH.
OIH, a widely-used oil services ETF, is trading for $54.97. The shares are just 1% below the 52-week high of $55.22 and 35% above the 52-week low of $40.72.
Over 4,000 July 53 puts traded in OIH in blocks for $0.45 and $0.50. There was very little open interest in the strike beforehand, so this is definitely opening activity.
While OIH is near its 52-week high, these put purchases suggest there could be some downside coming. Once again, put purchases could also be used for a hedge against a long position. Either way, OIH bears watching in the weeks ahead.
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
