CTL, PVA Options – Unusual Trading Activity

| June 11, 2014 | 0 Comments

This week we’re taking a look at unusual options trading activity in CenturyLink (CTL) and Penn Virginia (PVA).

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:

CenturyLink (CTL)

At least one trader believes telecom company CTL is a good, long-term buy.

CTL is currently trading for $36.86.  The price is 36% above the 52-week low of $27.06 and is just 2% below the previous 52-week high of $37.67.

The trader purchased 2,500 January 40 calls expiring in 2016.  The price paid for the option was $1.90 per contract.  That means the stock price needs to be above $41.90 by January 2016 expiration for the trader to profit.

Of course, these options have about a year and half to go before expiration hits, and a lot can happen between now and then.  In some ways, $1.90 per contract doesn’t seem like a whole lot for 18-months control of 250,000 shares of CTL at $40.

Penn Virginia (PVA)

A neutral trade in PVA suggests the oil and gas driller will be trading sideways through the end of the year.

PVA is trading for $14.41.  The shares are 21% below the 52-week high of $18.20 and 225% above the 52-week low of $4.43.

A block of 2,425 December 15 calls was sold in PVA options for $1.85.  Those short calls were offset by the purchase of 242,500 shares at $14.39.  In other words, this is a covered call trade.

Although PVA has made impressive gains from its 52-week low, this trade suggests the upside is limited for this year.  It also implies there’s a floor on how far the share price will fall.

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!

Yours in Profit,

Gordon Lewis

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Category: Options Trading

About the Author ()

Gordon Lewis is the Chief Investment Strategist and editor for the popular daily newsletter – Options Trading Research. He’s also one of the key analysts behind the highly successful Options Trading Wire and Advanced Options Adviser. As a market maker on the floor of the CBOE, Gordon analyzed and traded stocks and options across a broad range of market caps and industries including retail, internet, oil, insurance, and telecom. He often traded thousands of options contracts per month… and it’s fair to say, Gordon’s analyzed and invested in some of the most complex and successful options strategies in the world.

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