XOP, AEO Options – Unusual Trading Activity – November 10, 2014

| November 10, 2014 | 0 Comments

Unusual Trading VolumeThis week we’re taking a look at unusual options trading activity in SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and American Eagle Outfitters (AEO).

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:

SPDR S&P Oil & Gas Exploration & Production ETF (XOP)

Massive trades in XOP options suggest the E&P industry may be in for a rebound.

XOP is currently trading for $61.10, down 9% for the year. The price is 17% above the 52-week low of $52.15 and is 27% below the 52-week high of $83.85.

Recently, two massive blocks of calls were bought in XOP. The January 63 calls were purchased 250,000 times for $1.84 and the January 65 calls were also bought 375,000 times for $1.28.

That’s clearly a huge bet on the upside of XOP. It does make some sense after the industry has been shellacked this year on plunging oil prices. A trade like this with multiple call (or put) buys in the same month at different strikes is often referred to as a stupid.

American Eagle Outfitters (AEO)

Options traders believe AEO is going to hold above its 200-day moving average.

AEO is trading for $12.44. The shares are 23% below the 52-week high of $16.31 and 25% above the 52-week low of $9.92.

Recently, about 6,000 November 13 calls were purchased between $0.40 and $0.55. The call volume is well above the previous open interest, suggesting opening action.

The stock price is sitting right at the key 200-day moving average. Buying the calls at roughly the at-the-money strike implies the buyer doesn’t believe AEO will breach the support line, at least this month.

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.