XLF, VXX Options – Unusual Trading Activity – June 21, 2013

| June 21, 2013 | 0 Comments

Unusual Trading VolumeThis week we’re taking a look at unusual options trading activity in Select Sector Financial SPDR Fund (XLF) and iPath S&P 500 VIX Short Term Futures ETN (VXX).

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:

Select Sector Financial SPDR Fund (XLF)

Yesterday’s big drop is causing some investors to worry. The concern seems to have convinced several traders to load up on XLF puts.

XLF is currently trading for $19.18 per share and is down over 3% for the week. The stock is sitting 39% off the 52-week low of $13.78 and is 6% below the 52-week high of $20.35.

Buyers snapped up over 180,000 XLF July 19 puts at various prices in the $0.30 to $0.40 range. That’s a ton of volume for a single strike in any type of stock or ETF.

In this case, investors could be very concerned the financial sector is about to experience a big pullback. As such, the put purchases could be speculative or a hedge against long stock. Or, it could be traders covering short put positions.

Regardless, it’s a ton of action on the benchmark financial ETF and bears further watching.

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

Earlier in the week – before Thursday’s big selloff – investors seem to be betting on a decrease in short term volatility.

VXX is currently trading for $22.41. That’s after a 12% spike on Thursday. The price is 25% above the 52-week low of $17.97 and 68% below the 52-week high of $70.84.

Traders purchased 10,000 July 12th weekly puts at the 17 strike for just $0.09. Open interest on the strike was just 438 contracts, so it’s clearly an opening trade.

What’s interesting is VXX was trading at $19.69 at the time of the trade and has since climbed 14% in a very short period of time. Now, the buyers only spent $0.09 a contract, but the puts are already worth zero.

Still, no one wants to throw away $90,000 – unless it’s a hedge. Of course, there’s still time left for the VXX to reverse.

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.