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Unusual Options Activity: BP p.l.c. (BP)

Unusual Options Activity: BP p.l.c. (BP)

Traders bet high oil prices will persist this month. The January 31st $40 call option onBP (BP), saw a 16-fold rise in volume, going from 186 open contracts to nearly 3,000 contracts trade hands. The bet, with shares of BP trading right around $40, will pay off should oil prices continue to trade higher and the energy company goes with it. The call buyer paid about $0.76, or $76 per contract, so BP shares would need to trade to $40.76 to profit at expiration in 24 days. Given the short-term, at-the-money nature, this looks like a hedge trade—if oil prices continue to rise on geopolit...
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Unusual Options Activity: Plains GP Holdings (PAGP)

Unusual Options Activity: Plains GP Holdings (PAGP)

Traders bet on 10 percent jump by late February.The February 21st 2020 $21 call options onPlains GP Holdings (PAGP), saw a whopping 148-fold surge in trading volume. From 124 open contracts, volume saw over 18,400 contracts trading hands. The bet, with shares trading just over $19, implies about a 10 percent move higher for shares in the next 46 days. The call buyer paid just $0.30, or $30 per contract. If shares stay under $21, they will expire worthless. If shares move over $21.30, the option trader will profit penny-for-penny depending on how much higher shares move in the next 46 ...
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Unusual Options Activity: Conoco Phillips (COP)

Unusual Options Activity: Conoco Phillips (COP)

Traders bet on rally this month.January 24th call options onConoco Phillips (COP) with a $66 strike price saw a 34-fold rise in trading volume. Going from 108 open contracts to nearly 3,700, the trade is a bet that shares can move at least $0.50 higher from their current price around $65.50. The call buyer paid just under $1.50 per share for the option, so a move to $67.50 will allow the trade to profit at expiration. Shares of Conoco Phillips have been rallying since October, but are still below 52-week highs set in early 2019 around $70 per share.Action to take: Shares are in an upt...
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Unusual Options Activity: Texas Instruments (TXN)

Unusual Options Activity: Texas Instruments (TXN)

Traders bet on drop in shares in 2020.The January 2021 $87.50 put options onTexas Instruments (TXN) saw a six-fold increase in volume in trading, going from 104 open contracts to seeing over 630 trade hands. The bet, which has 380 days to play out, would move in-the-money if shares fell by about one-third from their current price near $128. Traders paid about $2.10, or $210 per contract on average, making for an inexpensive market hedge that could soar in value on a market decline. The semiconductor company has just beaten out the stock market in the past year with a 35 percent rally ...
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Unusual Options Activity: Target (TGT)

Unusual Options Activity: Target (TGT)

Traders bet on drop in shares in the next 9 days.The January 10th $126 put options onTarget (TGT) saw a five-fold surge in volume, going from 434 open contracts to over 2,050 trade hands. Expiring in just 9 days, the bet will pay off if shares of the retailer, which gained over 90 percent in 2019, will drop just $2 from its price of $128 per share. The option buyer paid about $0.85, so a move to $125 per share would lead to profits at expiration.Action to take: Find a longer dated put option on Target. It had an incredible run in 2019, thanks to some modest same-store sales growth and th...
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Unusual Options Activity: Uber (UBER)

Unusual Options Activity: Uber (UBER)

Traders bet on further rally.The February 2020 $30 call options onUber (UBER) saw a 19-fold rise in volume, going from 265 open options to over 5,100 contracts trade hands. Expiring in 52 days, shares trade just under $30, making these options at-the-money. A rally in shares should send the options up dollar-for-dollar, less any loss of time premium. With the buyer paying around $2.15, shares would need to clear $32 in late February for the option buyer to profit at expiration. Considered a failed IPO in 2019, Uber shares saw some further selling as the IPO lockup period expired and m...
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Unusual Options Activity: JD.com (JD)

Unusual Options Activity: JD.com (JD)

Traders bet on further rally in shares.The June 2020 $44 calls onJD.com (JD) saw a 20-fold rise in volume, going from 100 open trades to over 2,000 contracts change hands. Shares currently trade just over $36, so a move to $44 in the next 172 days before expiration implies a 22 percent upside for shares. The option buyer paid about $1.08, or $108 per contract. That’s a low price that could lead to triple-digit returns if shares rally sufficiently. JD.com is an e-commerce company operating in China, with fulfillment centers in 7 cities and 550 warehouses in 81 cities throughout the cou...
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Unusual Options Activity: Snap (SNAP)

Unusual Options Activity: Snap (SNAP)

February call buying suggests further rally.The February 2020 $16 call option onSnap (SNAP) saw a 62-fold rise in volume, going from 182 open contracts to over 11,300 trade hands. With 56 days until expiration, and with shares of Snapchat around $15.85, a 1 percent move higher in the social media firm will move the options in-the-money. At a price of $1.35 per contract, however, the option buyer will see the option trade at a profit come expiration if shares move over $17. Shares have already given investors a staggering 188 percent return in the past year, but are off their 52-week h...
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Two Royalty Stocks for 2020 (and Beyond)

Two Royalty Stocks for 2020 (and Beyond)

1 2This high-margin business model spells consistent profits.While there are plenty of business models out there for how to operate a company, a great one for shareholders is in the royalty space. Simply put, a royalty company owns a patent or provides capital to another company. When that other company makes a product, a tiny amount of sales go to the royalty company. This provides a number of advantages for the royalty company. They have no production risk, no sales, and can operate with very few employees. That means these companies can produce higher profit margins, and reward sh...
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Unusual Options Activity: Visa (V)

Unusual Options Activity: Visa (V)

Traders bet on continued rally.The February $200 call option onVisa (V) saw a 10-fold surge in volume, going from 140 open contracts to seeing over 1,400 trade hands. The bet, expiring in 57 days, is that shares can move up to $200 from their current price near $188. The $12 move in shares is about a 6.4 percent rally. The option buyer paid $1.02, or $102 per contract, making for an inexpensive way to bet on the current rally in shares to continue. Visa shares have had a fantastic surge this year with a 53 percent rally.Action to take: As part of a payment system oligopoly with a fant...
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