MSFT, IWM Options – Unusual Trading Activity – July 28, 2014

| July 28, 2014 | 0 Comments

Unusual Trading VolumeThis week we’re taking a look at unusual options trading activity in Microsoft (MSFT) and iShares Russell 2000 (IWM).

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:

Microsoft (MSFT)

Microsoft’s strong year is likely to continue, at least according to recent options action.

MSFT is currently trading for $44.33. The price is 47% above the 52-week low of $30.17 and is just 3% below the 52-week high of $45.71.

Last week, about 32,000 September 48 calls were purchased. The price of the calls ranged from $0.20 up to $0.26. Open interest implies this is opening action.

MSFT is up over 20% year to date and about 6% higher over the last month. However, the stock would need to climb another $4 from current levels for the calls to break even. Still, there’s still plenty of time before September expiration.

iShares Russell 2000 (IWM)

At least one trader believes there could be some downside yet in small cap stocks.

IWM, by far the most popular fund for tracking small caps, is trading for $112.73, down 1% on the year. The shares are 6% below the 52-week high of $120.51 and 14% above the 52-week low of $98.84.

A bearish put spread, expiring on August 29th, traded more than 7,000 times. The trade consisted of the 112 puts being purchased while the 104 puts were sold. The total cost of the trade was $1.67 per spread.

The max loss on this trade is $1.67, while the max gain is $6.33. The trade is maximized should IWM close at $104 or below by August 29th. A bearish put spread like this could be a pure downside bet on small caps, or it could serve as a hedge.

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

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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.