LCC, ZNGA Options – Unusual Trading Activity – November 6, 2013
This week we’re taking a look at unusual options trading activity in US Airways (LCC) 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:
US Airways (LCC)
An interesting, bearish trade occurred in US Airways this week.
LCC is currently trading for $22.68 per share, up 68% year to date. The share price is 97% above the 52-week low of $11.52 and is just 5% below the 52-week high of $23.90.
The trade involved a sale of December 21 puts for $1, while at the same time January 21 puts were bought for $1.45. This type of trade is called a calendar spread and cost the trader a total of $0.45.
In this case, the trade is maximized if LCC closes down at $21 on December expiration. The trade would collect the entire $1 from the put sale, and also most likely gain (or break even) on the long January puts.
Zynga (ZNGA)
Options action suggests at least some traders believe ZNGA shares are on the rise.
ZNGA is currently trading at $3.80. It’s 82% above the 52-week low of $2.09 and just 6% below the 52-week high of $4.05.
A block of over 13,600 November 4 calls were bought this week for just $0.08. A straight up call trade like this means the buyers believe ZNGA’s share price will be north of $4 by November expiration.
For just 8 cents, there’s clearly not a whole lot of risk to this trade. However, expiration is only 10 days away, so ZNGA will need to climb more than 10% in that time frame for the options to make money. The proximity to expiration is the reason the calls are so cheap.
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
