SWC, JRCC Options – Unusual Trading Activity – March 10, 2014
This week we’re taking a look at unusual options trading activity in Stillwater Mining (SWC) and James River Coal (JRCC).
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:
Stillwater Mining (SWC)
Stillwater’s impressive run may be slowing down, according to at least one big trader.
SWC, a platinum and palladium miner, is currently trading for $14.90 per share and is up 23% over the past month. The share price is currently 52% above the 52-week low of $9.78 and is just 2% below the 52-week high of $15.16.
Last week, a block of 10,000 April 15 calls traded for $0.35. Average daily volume in SWC is around 2,000 contracts, so it’s definitely an unusual trade in this name.
Mostly likely this is a covered call trade, with the call seller long the stock. The trader must feel the stock isn’t going to trade much higher than $15 prior to April expiration. It also suggests the shares won’t drop much from current levels.
James River Coal (JRCC)
Recent put selling suggests JRCC’s fall from grace may finally be coming to a halt.
JRCC, a once-prominent coal miner, is trading for $0.69 – down nearly 70% over the last year. The shares are up 25% from the 52-week low of $0.55 and are 80% below the 52-week high of $3.50.
Over 1,700 June $0.50 puts were sold for $0.20. As such, this trade will be profitable if JRCC closes above $0.30 per share on June expiration (well below the 52-week low).
We don’t often see this kind of option activity in a stock trading under $1.00 per share. If JRCC doesn’t go bankrupt, put selling at these levels is a pretty good idea. The company is pursuing strategic alternatives at this point, so bankruptcy doesn’t seem likely.
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
