NMR, AMLP Options – Unusual Trading Activity – April 5, 2013
This week we’re taking a look at unusual options trading activity in Nomura Holdings (NMR) and ALPS Alerian MLP ETF (AMLP).
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:
Nomura Holdings (NMR)
An unusual amount of option activity has been detected in NMR. Daily average volume in NMR has averaged a miniscule 15 contracts over the last month. But traders have traded over 1,700 contracts on the stock today.
NMR is currently trading for $6.39 per share. That’s a brand new 52-week high and a whopping 110% higher than the 52-week low of $3.05.
Over 1,200 contracts were traded on the October $7.50 calls. That includes a 1,000 lot that traded for $0.40. With the open interest on the strike being a meager 36 contracts, these are clearly opening trades.
The bullish play will become profitable if NMR closes over $7.90 by October expiration. That’s roughly a 23% move from today’s closing price.
Why the sudden interest in the Japanese bank?
Essentially, the Bank of Japan will be engaging in the most ambitious monetary stimulus program in history. They plan on buying $73 billion worth of bonds per month. Of course, this sort of unprecedented liquidity is good news for banks – and could hopefully kick start the Japanese economy.
With the huge benefit of monetary stimulus to banks, buying cheap calls on NMR is a savvy play.
ALPS Alerian MLP ETF (AMLP)
Our tracking system has detected bearish options activity in the MLP ETF.
AMLP is currently trading for $17.44. The shares are up 18% from the 52-week low of $14.73 and are currently near the 52-week high of $17.79.
This week, a two massive blocks of puts traded in AMLP. The May 17 puts traded for a block of 10,000 and 9,700 for $0.35. That’s compared to average volume of 270 contracts per day.
Why the big bearish bet?
First off, AMLP seeks investment results that correspond to the Alerian MLP Infrastructure Index – an index that tracks the overall performance of the US energy infrastructure Master Limited Partnership asset class.
Here’s the deal…
Oil refineries sold off sharply on news the EPA will be requiring a higher standard of fuel emissions. The new standard could cost refineries hundreds of millions of dollars. As such, investors in energy infrastructure stocks got spooked.
The large put trades could be an investor attempting to profit off the EPA news and the potential for further losses in the industry. Or, it could be a hedge against a significant long position in MLP stocks (or the index itself).
Either way, AMLP option action should be on your radar if you own MLPs or are interested in investing in them.
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
