VIX, EWI Options – Unusual Trading Activity – February 3, 2014

| February 3, 2014 | 0 Comments

Unusual Trading VolumeThis week we’re taking a look at unusual options trading activity in CBOE S&P 500 Volatility Index (VIX) and iShares MSCI Italy Index (EWI).

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:

CBOE S&P 500 Volatility Index (VIX)

A large player is betting on volatility moving a little higher over the next few weeks.

VIX, the leading volatility benchmark, is currently trading for $19.00 per share.  The share price is 72% above the 52-week low of $11.05 and is 13% below the 52-week high of $21.91.

The trader bought nearly 80,000 February 16/20 call spreads.  The total price for the spread was $1.20.  (The trade happened before the VIX shot up this morning, otherwise the price wouldn’t be so low.)

This spread is maximized if VIX closes at or above $20 on February expiration.  The max gain on the trade in that case would be $2.80 – so there’s quite a bit of upside on the spread.  So far, the trader seems to have made the right call.

iShares MSCI Italy Index (EWI)

Some unusual action in EWI suggests at least one investor is bullish on Italian stocks.

EWI, a popular Italy ETF, is currently trading for $15.36.  The shares are up 37% from the 52-week low of $11.24 and are 6% below the 52-week high of $16.27.

Recently, a trader purchased over 1,100 February 16 calls for up to $0.20.  The strategy is betting on EWI closing above $16.20 by February expiration.

Now, 1,100 calls may not seem like a whole lot.  However, open interest at that strike was only around 250, and average daily contract volume is 465.  So, it definitely qualifies as unusual activity in this name.

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.