SPX, BBRY Options – Unusual Trading Activity – June 30, 2014
This week we’re taking a look at unusual options trading activity in S&P 500 (SPX) and BlackBerry (BBRY).
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:
S&P 500 (SPX)
A put trade in S&P 500 options shows some traders are betting on a total market meltdown.
The S&P 500 is currently trading for $1,961.46. The price is 22% above the 52-week low of $1,604.57 and is less than 1% below the 52-week high of $1,968.17.
Some traders are purchasing far out-of-the-money puts on SPX. Around 4,000 1,695 puts have traded recently, with the largest block of 2,750 trading for $0.30. These are Weekly options that expire in 11 days.
It’s highly unlikely the S&P 500 will plunge roughly 20% in the next 11 days, so this isn’t a hedge. It’s likely just some traders making a tail-risk bet just in case something catastrophic happens. The reason the puts are so cheap is because a move down to the strike is highly unlikely.
BlackBerry (BBRY)
Embattled mobile phone maker BBRY is getting a vote of confidence from traders.
BBRY is trading for $10.18, up 31% on the year. The shares are 16% below the 52-week high of $12.18 and 87% above the 52-week low of $5.44.
Today, 10,000 January 9 puts were sold in a block for $0.91. The put sellers will collect the entire premium should BBRY remain above $9 on January expiration. Open interest shows this is an opening trade.
BlackBerry has been struggling in recent years, but the stock recently gapped higher on positive earnings news. The put sale implies the stock price will remain elevated for the rest of the year – or the sellers don’t mind getting long the shares at $9.
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
