Travelers Options (TRV): Unusual Trading Activity

| April 5, 2012 | 0 Comments

Travelers (TRV)Options in big-cap company Travelers (TRV) have been lighting up our tracking system all week with a large amount of unusual trading activity.

And today is no different.  TRV call options are on the move.

Travelers has traded in a tight range since the beginning of the year.  Moving only between $58 and $60 a share.

In today’s market, Travelers is holding up well, currently up $0.15 to $59.35.

Like a kid in a candy store, option traders again today are buying a heavy amount of call options.

And the buying started as soon as the bell rang this morning.

Option traders have their eyes on the April $60 call options.  So far this morning, these options have already traded over 13,000 times. Well above the normal volume.

According to our tracking system, the average price being paid is about $0.65 a contract.

Buying these calls naked (without any corresponding stock or other option), traders have unlimited upside potential if TRV trades above $60.30 by April expiration.

What’s more, when we see heavy call buying spread across many traders and not just in a single block, it’s a good sentiment sign.

In other words, it shows that multiple traders have the same feeling about the stock’s potential rise.

Now, if you don’t already know, Travelers provides various commercial and personal property and casualty insurance products and services to businesses, government units, associations, and individuals.

With TRV trading in a tight range for such a long time, what is causing this sudden burst in option activity? 

There hasn’t been any news headlines or press releases on the stock.

So I believe this is strictly an earnings play.

Travelers announces first quarter results on Wednesday April 18, before the open.

Analysts are looking ahead this year.  They believe that premium growth should accelerate if an economic recovery gains traction.

Their forecast is for modestly higher premiums in coming periods and an increase in demand for commercial insurance products.

They also believe TRV will have no problem retaining its existing client base as well as be able to generate new business opportunities.

Bottom line…

It’s obvious a number of option traders think it’s time for Travelers to break out of its stagnant range and move to the upside.  We’ll wait and see if they’re correct.

For more detailed information on unusual options activity and how you can profit from it, be sure to sign-up for our daily newsletter, Options Trading Research.  It’s always 100% free and packed full of option trading ideas you can use immediately in your own portfolio.  Click here to subscribe for free.

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Category: Unusual Options Trading Activity

About the Author ()

Marcus Haber is the co-editor of Options Trading Research and boasts well over a decade of real-life options experience. Learning from some of the biggest names in the business, Marcus has served as an Options Strategist for a number of firms and was also appointed to the Options Advsiory Board with Pershing, a branch of the Bank of New York.