PCG, AZN Options – Unusual Trading Activity – June 23, 2014
This week we’re taking a look at unusual options trading activity in PG&E (PCG) and AstraZeneca (AZN).
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:
PG&E (PCG)
A trade in California utility giant PCG suggests the stock will be range-bound until September.
PCG is currently trading for $47.63. The price is 22% above the 52-week low of $39.01 and is just 2% below the previous 52-week high of $48.64.
The trade involved selling the September 45 puts and 50 calls simultaneously. Both sides of the spread were sold 5,000 times for a total cost of $1.10.
A spread like this is called a strangle and it’s a bet that the PCG share price will remain between $45 and $50 by September expiration. For a utility that doesn’t move all that much, this seems like a relatively good bet.
AstraZeneca (AZN)
A complex spread in pharmaceutical giant AZN could signal the stock will continue to trend higher.
AZN is trading for $74.45. The shares are 10% below the 52-week high of $82.68 and 66% above the 52-week low of $44.77.
One trader purchased over 3,500 January 90 calls while selling the same amount of January 65 puts and January 90 calls. The total cost of the trade works out to a credit of $0.05.
Basically, the trader will collect $10 on the spread if AZN closes at $80 or higher on January expiration. The trade is essentially a long call vertical spread with an extra put sale to nullify the cost of the spread. With AZN in the center of merger/acquisition talks, there appears to be limited downside in the stock.
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
