NRG, OI Options – Unusual Trading Activity – June 14, 2013
This week we’re taking a look at unusual options trading activity in NRG Energy (NRG) and Owens-Illinois (OI).
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:
NRG Energy (NRG)
One strategist is making a big bet on wholesale power producer NRG.
NRG is currently trading at $26.69 and is up 4% for the week. Shares are trading 85% off the 52-week low of $14.45 and are 7% below the 52-week high of $28.67.
A trader sold 2,650 of the January 26 puts for $2.35. There was no open interest on the strike prior to the trade, so this is clearly a new position.
Selling puts at the money like this is a neutral to slightly bullish strategy. The trader is collecting a decent chunk of money (over $600,000) for the trade, which he/she will be able to keep if the stock remains above $26 by January expiration.
Breakeven for the trade is $23.65 based on the strike price minus the hefty $2.35 premium.
Owens-Illinois (OI)
An unusual amount of calls traded this week in glass container producer, OI.
OI is currently trading for $28.17. The shares are up 32% year-to-date. The price is 68% above the 52-week low of $16.82 and just 5% below the 52-week high of $29.65.
Over 3,500 front month calls traded in OI. Why is this unusual? The calls traded were at the June 26 strike, which are both in the money and expire at the end of next week. The trader or traders paid roughly $1.30 per contract.
A short-term, in the money trade like this is essentially a straight bullish bet on the stock. The options will basically move in lock step with the stock price, so the buyer is essentially just taking advantage of the leverage options provide.
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
