VXX, FB Options – Unusual Trading Activity – December 11, 2013

| December 11, 2013 | 0 Comments

Unusual Trading VolumeThis week we’re taking a look at unusual options trading activity in iPath S&P 500 Short-Term Futures ETN (VXX) and Facebook (FB).

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:

iPath S&P 500 Short-Term Futures ETN (VXX)

At least some traders don’t seem to be overly concerned about volatility in the short-term.

VXX, a very popular short-term volatility ETN, is currently trading for $46.07, down 65% for the year.  The share price is just 5% above the 52-week low of $43.98 and is 69% below the 52-week high of $147.16.

This week, nearly 5,000 June calls were sold by speculators.  Specifically, the June 55 calls were sold for $5.33.  Previously, open interest was just over 800, suggesting this is an opening position.

Most likely, these calls were sold naked.  It’s very common for VXX to trade at a premium to the actual volatility index, and as expiration closes in, the ETN loses value.  It seems some traders believe that’s going to be the case again over the next six months (and any volatility spike will be short-lived, if it happens at all).

Facebook (FB)

According to one investor, FB shares have a bullish future.

FB is trading at $50.09.  The shares are an impressive 121% above the 52-week low of $22.67 and are 9% below the 52-week high of $54.83.

A monster ratio call spread traded this week in FB, with a trader selling over 26,000 January 45 calls for $5.60 while buying 40,000 January 50 calls for $2.40.  The spread resulted in a $0.80 credit.

This strategy means the trader pulled in over $5 million from the spread, but is positioned to make money if the shares move higher.  The larger amount of long calls is what gives the trade a bullish bias.

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

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.