TWTR, BTU Options – Unusual Trading Activity – April 28, 2014

| April 28, 2014 | 0 Comments

Unusual Trading VolumeThis week we’re taking a look at unusual options trading activity in Twitter (TWTR) and Peabody Energy (BTU).

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:

Twitter (TWTR)

At least one investor thinks Twitter is going to increase over 20% in the next couple months.

TWTR is currently trading for $41.61.  The price is just 7% above the 52-week low of $38.80 and is 44% below the 52-week high of $74.73.

The trader bought just over 10,000 July 50 calls while selling the same number of July 60 calls.  The total price of the bull call spread was $1.70, which is also the maximum loss on the trade.

A call vertical such as this makes money between the long strike and the short strike, taking into account the cost of the trade.  In this case, any share price between $51.70 and $60 will be profitable for the spread owner come July expiration.

Peabody Energy (BTU)

An option trader believes coal miner BTU is in for some volatility in the coming days.

BTU is trading for $18.  The shares are 16% below the 52-week high of $21.53 and 27% above the 52-week low of $14.13.

A recent trade in BTU pairs 20,000 May 18 puts with 800,000 shares of BTU stock.  The stock was purchased for $18.39 while the puts were bought for $0.48.

This type of trade is a delta-neutral trade that performs well in a high volatility environment.  That is, a big move in either direction will pay off as the buyer can make money on the puts or the stock.

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.