TSLA, CMCSA Options – Unusual Trading Activity – December 4, 2013
This week we’re taking a look at unusual options trading activity in Tesla Motors (TSLA) and Comcast (CMCSA).
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:
Tesla Motors (TSLA)
One risk-taking trader believes electric car company Tesla won’t plunge by end of this week.
Tesla is currently trading for $144.70 per share and is up an impressive 327% for the year. The share price is 350% above the 52-week low of $32.11 and is 25% below the 52-week high of $194.50.
This week, nearly 4,500 spreads traded, expiring on December 6th. The weekly put spread consisted of the 122/124 puts with the 124 strike sold for $0.35 while the 122 strike was bought for $0.22. That means the trade collects $0.08 in premium – the max that can be gained.
That’s quite a risky trade considering the upside is only 8 cents. However, the stock would have to plunge over $20 by the end of the week for the trade to blow up. Still, risking $1.92 to make $0.08 per spread isn’t for the faint of heart.
Comcast (CMCSA)
According to one investor, cable giant Comcast has a bullish, but limited future ahead.
CMCSA is trading at $48.77. The shares are sitting at 36% above the 52-week low of $35.74 and are just 4% below the 52-week high of $50.75.
A trader purchased 5,000 50/60 January 2016 call spreads. The total cost of the trade was $3.15. If the stock closes at 60 or above way out in 2016, the spread will earn $6.85 in profits.
This strategy is somewhat unusual given the long time to expiration. With the spread capped not too far from the current price, it implies the shares don’t have a huge amount of upside (in over two years). However, the trader may have just been using the short strike to reduce costs and isn’t concerned about losing out on some upside potential.
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
