Trading Tips Blog

Call buying suggests pop higher this week. The November 15th $98.50 call options on Twilio (TWLO) saw over 8,400 contracts trade, a 44-fold explosion in volume from the prior open interest under 200 contracts. The option, expiring in two days, is about 5 percent out-of-the-money and thus on track to expire at zero. The call buyer expects some kind of move higher, and the call seller expects shares to stay under the strike price. Shares of the cloud communications company fell nearly 3 ...
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Bet on double-digit drop by year-end. The December 20th $30 put options on Kontoor Brands (KTB) saw nearly 15,000 contracts trade recently, a 90-fold explosion in volume from the prior open interest of 166 contracts and a huge sign of confidence for a drop. The bet implies about a 20 percent downside for shares from their current price of $36.00 before year-end. With a price of just $0.53, or $53 per contract, the option has the potential for a huge move if ...
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Bet on shares moving higher after earnings beat. The April 2020 $105 call option on Qualcomm (QCOM) saw a seven-fold surge in trading from 100 call options to over 700 calls trade. The move comes after the company beat earnings and shares hit a new 52-week high, topping $90 per share. The option is a bet on another $15 rally in shares, or another 16.7 percent higher in the next six months. At a price of $1.80 per option ...
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Bet on further rally in shares. The June 2020 $205 call options on Alibaba Group (BABA) saw over 5,200 contracts trade, a 7-fold surge in volume. The trader is betting that shares, currently around $187, will rally about 9.6 percent higher in the next 224 days—a solid bet if some of the trade war truce headlines prove true this time. Based on the price paid by the trader of $12 per contract, they’ll make a profit if shares are at least $217 ...
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In-the-money call buying suggests upside. March 2020 $25 call options on Uber (UBER) saw over 2,500 contracts trade, a 13-fold increase in volume from the previous open interest of 192. With shares around $26.50, the option is about $1.50 in-the-money, and should move dollar-for-dollar higher with shares in the next 134 days before expiration, less the time premium. The buying comes after the company reported good earnings—but that it also burned through substantial cash—sending shares to post-IPO lows. An in-the-money bet is more ...
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Surge in call buying after company repositions portfolio for higher dividends and buybacks. June 2020 $160 call options on JP Morgan Chase (JPM) saw heavy trading, with over 1,400 contracts trading against a prior open interest of 100. The bet, with shares at $130, is for a $30 rise in the next 226 days—or a 12.3 percent jump in price. That’s certainly achievable, given reports that the big bank readjusted its portfolio out of $130 billion in cash and into bonds. The ...
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Surge in calls expiring Friday. The November 8th $52 call options on Micron (MU) saw over 2,700 contracts trade against a prior open interest of 256, an 11-fold surge in volume. Given that the option expires on Friday, and with Micron shares around $49.50, shares of the company would need to rally another $2.50 for the option to close in-the-money. As market sentiment has improved on trade issues, tech companies like Micron could move that much higher this week. Action to take: Micron ...
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In-the-money puts suggests bearish move ahead. The April 2020 $17 put options on Hanesbrands (HBI) saw over 13,700 contracts trade, a 68-fold surge in volume. Oddly, with shares of the company already at $15.50, the option is already about $1.50 in-the-money, and should move dollar-for-dollar with shares lower from here. At a price of $2.70, the put buyer really paid just $1.20 in premium, and shares would need to only slip to $14 for the put buyer to make money by April. Hanesbrands ...
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