IYR, HES Options – Unusual Trading Activity – July 11, 2014
This week we’re taking a look at unusual options trading activity in iShares Dow Jones US Real Estate (IYR) and Hess (HES).
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:
iShares Dow Jones US Real Estate (IYR)
An option strategy in a popular real-estate fun is suggesting volatility will be low this summer.
IYR is currently trading for $72.23. The price is 23% above the 52-week low of $58.62 and is less than 1% below the 52-week high of $72.55.
This week, 6,000 August 71.50 calls were sold for $0.94, while the same number of 71.50 puts were sold for $0.87. The options were traded in a single block. This type of trade is called a short straddle.
We’re used to seeing long straddles trade, but you don’t see the short side of the strategy occur as often due to the risk involved. Basically, IYR needs to close in a roughly $3.50 range (around the current price) by August for the trade to be profitable.
Hess (HES)
Oil and gas producer HES has been on a tear this year – and at least one trader believes the gains will hold up this summer.
HES is trading for $98.50, up 20% on the year. The shares are just 2% below the 52-week high of $100.12 and 46% above the 52-week low of $67.59.
A trader sold over 4,700 August 92.50 puts in blocks for $0.67 per option. Given the low open interest prior to the trades, this is definitely an opening position.
The trader will collect the full amount of premium should the stock remain above $92.50 by August expiration. That strike price happens to be at a strong support level as well. This could be a pure options play, or the trader may be willing to get long the shares at the strike price.
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: Options Trading
