RSH, C Options – Unusual Trading Activity – September 13, 2013

| September 13, 2013 | 0 Comments

Unusual Trading VolumeThis week we’re taking a look at unusual options trading activity in RadioShack (RSH) and Citigroup (C).

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:

RadioShack (RSH)

At least one strategist isn’t expecting RSH to do much for the next month or so.

RSH is currently trading for $3.94 per share. The share price is 107% above the 52-week low of $1.90 and 8% below the 52-week high of $4.28.

The trade of the week in RSH consisted of the sale of the October 4 straddle 5,000 times. That is, the October 4 calls and the October 4 puts were both sold 5,000 times for a total credit of $0.87.

The point of the short straddle is to profit off the lack of movement in a stock. In this case, if RSH closes between $3.13 and $4.87 on October expiration, this trade is a winner. The closer to $4 it closes, the more money the straddle seller makes (up to $0.87).

Citigroup (C)

A trader is betting that C’s share price won’t collapse before November.

C is currently trading for $50.26. The shares are up 58% from the 52-week low of $31.85 and are just 6% below the 52-week high of $53.55.

This week, a trader sold 5,300 November 43 puts for $0.30. The put seller collects all the premium from the sale should C close above $43 on November expiration. That works out to $159,000 in premium.

If C does drop the roughly 15% (from the current price) to below $43, the trader will be obligated to buy shares in C at that price. He or she then must decide whether the 530,000 shares are worth holding on to.

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.