Delphi Automotive PLC (DLPH) is a manufacturer of vehicle components for worldwide automotive markets. The company’s stock is currently trading around $67.35 in a 52 week range of $40.78-$68.14. The stock has been very strong this year with shares rallying nearly 12% year to date. It appears that options traders expect this trend to continue as the order flow in URA during today’s session has been decidedly bullish. Earlier today a trader bought 1,530 DLPH Aug 72.5 calls for $2.15. This is a bullish trade being placed as the stock touches off of new 52 week highs. This block also represents the biggest order to hit the tape in DLPH on a day when more than 9.5 the average daily option volume has traded in DLPH. With shares just off of their 52 week highs we believe that this bullish order flow serves as a signal for a long position in DLPH.
My trade: I bought the DLPH Aug 72.5 Calls for $1.55
Risk: $155 per 1 lot
HCA Holdings, Inc. (HCA) is a holding company that owns and operates healthcare facilities. The company’s stock is currently trading around $50.25 in a 52 week range of $35.20-$52.49. The stock has been performing well this year with shares rallying 5.4% year to date. Options action during today’s trading session suggests that traders believe this trend will continue through April expiration. Earlier in the session a trader bought 4,700 HCA Apr 50 calls for $1.60. This is a very bullish trade that requires this trader to lay out over $750,000 in capital. Shares of HCA are also trading above the Ichimoku Cloud, indicating the stock is in bullish territory. With a strong technical setup and bullish order flow we believe that HCA is setting up well for a long position.
My Trade: Buying the HCA Apr 50 Calls for $1.60
Risk: $160 per 1 lot
Western Refining, Inc. (WNR) is an oil refiner and operator of service stations and convenience stores. The company’s stock is currently trading around $41.70 in a 52 week range of $25.62-$43.00. The stock has been underperforming the market this year and shares have fallen around 1.65% year to date. Despite this relative underperformance options traders have taken a decisively bullish stance on WNR today as we have seen some very bullish orders hitting the tape. Earlier in today’s session a trader bought 2,000 WNR Mar 41 calls for $0.40. This is a very aggressive trade because these options will expire tomorrow. This block also represents volume nearly 5.2 times the average daily option volume in WNR. We believe that order flow this strong justifies a long in WNR.
My Trade: Buying the WNR Apr 41 Calls for $0.45
Risk: $45 per 1 lot
KB Home (KBH) is a homebuilder in the U.S. constructing and selling homes in markets across the country. The company’s stock is currently trading around $18.45 in a 52 week range of $15.48-$25.14. The stock has been relatively sideways this year with shares rallying around 1% year to date. KBH reported better than expected earnings earlier this week and in today’s trading session we are seeing some bullish options activity in the name. Earlier in the session a trader bought 2,214 KBH Mar 18.5 calls for $0.12. This is actually a rather aggressive trade as these calls will expire tomorrow. This trader is hoping for a pop in KBH by tomorrow’s expiration. These calls were continually bought after the first order hit the tape and now more than 11,000 contracts have traded on that line against open interest of only 1,016. While this may look like a “lottery ticket” trade volume like this the day before expiration is worth paying attention to. We bought these same calls for $0.15.
Trade: Buying the KBH Mar 18.5 Calls for $0.15
Risk: $15 per 1 lot
TAL International Group, Inc. (TAL) is an equipment leasing company that leases containers and chassis to shipping lines and other customers. The company’s stock is currently trading around $42.20 in a 52 week range of $38.50-$57.82. The stock has not been performing well this year and shares have fallen nearly 27% year to date. Despite this poor performance we are seeing some very bullish activity in TAL options during today’s trading session. This morning a trader sold 4,148 TAL Mar 42.5 puts for $0.93. This is a very bullish trade involving a high level of risk meaning this trader’s level of bullish conviction is relatively high. While this is an aggressive trade we believe TAL set up well for a long at these levels.
Trade: I bought 1,500 Shares of TAL at $41.61
Targets: $42.35 and up every $0.25