Unusual Options Activity In Blackstone $BX

| April 13, 2015 | 0 Comments

Unusual Trading VolumeUnusual Options Activity In Blackstone $BX

As many of you know, unusual options activity 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…

The Blackstone Group $BX is one of the largest publicly owned investment managers in the world.  Although, the firm is mostly widely known for its private equity deals, which can often be massive.  Check here for more info on the business.

$BX is up 18% so far for the year.  The current share price of $40.04 is already 1% above the previous 52-week high and 56% above the 52-week low.

So what does unusual options activity in $BX tell us?

$BX has already been having a good year. However, the company really made a splash last week with a couple huge acquisition announcements.

First off, the company is buying a huge chunk of GE Capital’s real estate holdings.  Early reports have Blackstone taking on about $14 billion in real estate deals, mostly commercial mortgages.  Moreover, the company also announced a deal to purchased public real estate trust, Excel Trust $EXL for $2 billion.

Here’s the deal…

After the big acquisition news, a trader purchased 5,000 January 42 calls for $1.50.  Remember, a call option is when the trader expects the stock to go above the strike price by (January) expiration.

This trade makes money if $BX closes above $43.50 by expiration.  The cost of the trade is roughly $750,000, which is the max loss on the position.

If you think about, the trade makes perfect sense.  Breakeven is less than 10% higher than the current price.  Plus, the call buyer has over eight months left on the options.

Given the massive real estate deals this week, there’s no reason to believe $BX won’t continue to move higher.  Keep in mind, it’s highly likely Blackstone is going to make huge profits on both of these deals.

Here’s the chart of $BX:

unusual option activity, a chart of $BX

As you can see from the chart, $BX has had a solid year so far, and is definitely trending higher.  After recently testing the 50-day moving average, the stock has continued on to 52-week highs.

As I said earlier, this cut and dry trade makes a whole lot of sense.  Investors clearly like both deals.  And, there’s no reason to believe the company won’t make a fortune from its new real estate holdings.

More Options Trading Ideas…

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!

Yours in Profit,

Gordon Lewis

Note:  Gordon Lewis has been trading options for more than 15 years and he now writes and edits for Optionstradingresearch.com.  You can sign up for the newsletter and get a free research report. We are your go-to source for top notch options trading research.

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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.