MSFT, XLY Options – Unusual Trading Activity – August 9, 2013

| August 9, 2013 | 0 Comments

Unusual Trading VolumeThis week we’re taking a look at unusual options trading activity in Microsoft (MSFT) and SPDR Consumer Discretionary Fund (XLY).

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)

Investors seem to be particularly bullish in MSFT this week.

MSFT is currently trading for $32.89 per share. The shares are up 25% year-to-date. The current price is 27% above the 52-week low of $25.87 and 10% below the 52-week high of $36.43.

One or many investors are loading up on September MSFT calls. On one day alone this week, over 150,000 September 35 calls traded for around $0.14. Prior to the trade, open interest was just 15,000.

The call buying could be a cheap play on MSFT moving higher by September expiration. The shares are only $2 away from the strike, so it’s certainly an inexpensive way to get upside exposure to the stock without paying too much in premium.

SPDR Consumer Discretionary Fund (XLY)

One strategist traded a complex bearish spread today on the consumer discretionary sector.

XLY, the SPDR Consumer Discretionary Fund, is currently trading for $60.21. The shares are up 38% from the 52-week low of $43.64 and are just 1% below the 52-week high of $60.75.

The bearish trade consisted of 4,000 September 58 puts (purchased) and 8,000 September 54 puts (sold). The entire put ratio spread was bought for $0.31. The trade is maximized if XLY closes at or near $54 by September expiration.

As I mentioned last week, the benefit of a put ratio trade is it can significantly lower the cost of the trade. On the other hand, it does open up risk on the downside, but only if a very big decline occurs.

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.