NEM, GRPN Options – Unusual Trading Activity – July 5, 2013
This week we’re taking a look at unusual options trading activity in Newmont Mining (NEM) and Groupon (GRPN).
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:
Newmont Mining (NEM)
The assault on gold and precious metals hasn’t yet run its course – at least according to one strategist buying puts in Newmont Mining.
NEM is currently trading for $29.02 per share and is down over 36% for the year. The stock is sitting just 7% off the 52-week low of $27.07 and is 48% below the 52-week high of $56.28.
A buyer (or buyers) grabbed 4,000 NEM January 22 puts for $1.17. There was only open interest of 277 at the strike previously, so this was definitely an opening trade.
The trade will be profitable if the large gold producer closes below $20.83 by January expiration. That’s the strike price minus the premium price of the option. It’s quite a hefty drop from current levels – so someone is very bearish on NEM or is putting on a very expensive out-of-the-money hedge.
Groupon (GRPN)
Traders were very bullish on online deal site, Groupon, during the week.
GRPN is currently trading for $9.14. That’s after a 10% week-long climb. The price is 252% above the 52-week low of $2.60 and just 5% below the 52-week high of $9.59.
In one trade, a trader purchased 10,000 January 11 calls for $0.98. If it’s a speculative trade, it will be profitable if the stock closes above roughly $12 by January expiration.
On the other hand, GRPN has historically been a heavily shorted stock. As such, it’s possible this trade is a hedge against a large short position.
GRPN shares have gone straight up in recent days – likely as part of a short squeeze. So, it will be interesting to see what direction the stock takes over the next few weeks.
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
