Trading Tips Blog

Call buying indicates further rally this month. With 18 days until expiration, the December 20th $36 call options on Peloton Interactive (PTON) saw a 20-fold rise in volume, from 127 open contracts to over 2,600. As shares surged last week to $35, the option is merely $1 out-of-the-money, and a further rally could move it in-the-money. However, at a price over $2.15 per option, the option buyer needs to see shares rise to over $38 to make money at expiration. Peloton, a maker of ...
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Bet on rally through December. Call options expiring on December 20th with a $21 strike price on iQIYI (IQ) saw a 73-fold rise in volume, going from 115 open contracts to nearly 8,500 contracts trading hands. With the trade expiring in 21 days, and as shares of IQ trader just under $20, it’s a bet that shares will rally about 6 percent in the next few weeks. Given that shares have traded as high as $29 in the last ...
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Bet on drop in the next week. Put options expiring on December 6th with a $117 strike on Royal Caribbean Cruises (RCL) saw an 89-fold surge in volume recently, going from 131 open contracts to over 11,675 contracts trade. The option, expiring in nine days, will likely expire worthless unless shares drop from their current price just under $120, about a 4 percent move in-the-money. At a cost of just $1.00, or $100 per contract, however, it’s an inexpensive bet on a drop. The ...
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Call buying suggests big surge ahead. The January 2020 $19 call options on The Mosaic Company (MOS) saw a 43-fold rise in  volume in trading, with over 11,600 contracts trading hands against a prior open interest of 269. With 51 days to go, and with shares trading just below $19, the option trades almost at-the-money, and could move higher penny-for-penny if shares do as well. With the trade at $0.93, the shares will need to rise close to $20 for a profit by ...
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Long-term bet on further drop in shares. The January 2021 $4 put options on Banco Santander (SAN) saw over 1,000 contracts trade, a nine-fold increase on the prior number of open contracts on the option. The put is about $0.03 in-the-money, as shares trade just south of the strike price of $4. The put seller is betting that shares will decline in the next 416 days before expiration, and shares will need to drop to at least $3.40 to provide a profit after ...
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Put buying suggests slight drop ahead. The April 2020 $115 put options on Procter & Gamble (PG) saw a nine-fold surge in trading volume, from 174 contracts to over 1,500. Shares of the consumer goods company would need to fall by about $5 for this option to move in-the-money in just under six months. This kind of bet is a sign of hedging activity, given the small size of the potential pullback, and the timeframe on the options. The consumer goods giant has had ...
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Bet on shares heading higher into the spring. Over 7,180 contracts traded on the Freeport McMoRan (FCX) May 2020 $13 call option, a six-fold surge in volume. The trade, with shares currently around $11, is a bet on another $2 rally in the coming months—or another 18 percent gain from current levels. Such a move is possible, as the 52-week high for shares is closer to $15 rather than $13. With shares starting to head higher in recent weeks, ...
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Long-dated call buying rises after earnings beat. Shares of Target (TGT) rose to a new 52-week high after a great earnings report, and many traders made bets on how long the rally would last. With many trades expiring in the next few weeks, a surge of volume on the April 2020 $150 calls looks interesting. It’s a bet on shares rallying another $25, or 20 percent, in the next 148 days, and the 550 options trading over the prior open interest of 114 ...
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