VXX, SLV Options – Unusual Trading Activity – July 19, 2013

| July 19, 2013 | 0 Comments

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

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 VIX Short-Term Futures ETN (VXX)

VXX is trading at an all-time low. And, at least one strategist believes the short-term volatility tracker will remain at reasonably low levels.

VXX is currently trading for $16.53 per share and is down over 48% for the year. As I mentioned, the ETN is at a new low and is 73% below the 52-week high of $60.40.

A trader sold the September $26 calls a whopping 18,555 times for $0.26. The volume is twice the previous open interest so it implies a new position.

As long as VXX closes below $26 by September expiration, the trader will collect the full premium. Clearly, he or she does not expect volatility to significantly spike in the short-term as these calls appear to have been sold naked (i.e. not hedged with shares or other options).

iShares Silver Trust (SLV)

Silver has taken it on the chin lately, but one trader has taken a sizeable, moderately bullish bet on the precious metal.

SLV, the most popular silver ETF, is currently trading for $18.72. The price is 5% above the 52-week low of $17.75 and 45% below the 52-week high of $34.08.

In one trade, a trader purchased 18,500 August 20 calls for $0.40, while selling January 2015 23 calls for $1.50. The total credit received was $1.10. This type of trade is called a time spread because of the two different expirations involved.

Basically, the strategist believes there could be a near-term run up in the price of silver, but also expects a long-term ceiling. The trade can make up to $3 by August if SLV goes to $23. And, the $1.10 credit could still be realized if SLV closes below $23 by January 2015 – although that’s clearly a long ways off.

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.