Etsy, Inc. (ETSY) is an online marketplace seeking to connect individuals to aid the buying and selling of goods. The company’s stock is currently trading towards the bottom of the 52 week range of $19.15-$35.74 around $21.17. The stock has been relatively weak this year with shares falling around $9.37 or 31.23% year to date. ETSY is set to report earnings after the bell today and the stock is looking fairly strong ahead of the release. ETSY stock is higher on the session by around $0.48 or 2.33% ahead of the report.
However, the stock is likely under pressure this year due to Etsy’s recent controversy over the selling of counterfeit goods where the stock tumbled 10%. Etsy has been under fire to this date for withholding information about the company’s business operations and its counterfeit products. Over the past year Etsy has increasingly been brought to public attention for trademark and copyright infringement. This will be ETSY’s first earnings ever. The stock also looks weak on a chart with a downward trend ever since the company’s IPO in the middle of April this year. With a bearish historical performance record and a weak technical setup it is difficult to justify anything but a short in ETSY.
The options market is currently implying a move of around $3.65 or 17.30% in ETSY by this Friday’s close giving us a downside target around $17.52.
American Eagle Outfitters, Inc. (AEO) is a global retailer for clothing and personal care products. The stock is currently trading at the upper end of its 52 week range of $10.12-$18.12 around $15.68. The stock has been trading strongly this year relative to the market with shares appreciating around 13% year to date. AEO is scheduled to report earnings before the bell tomorrow, and the stock is looking fairly weak ahead of the release. AEO is lower on the session by around 1.9% ahead of the report.
The stock is likely lower today due to American Eagle’s weak historical record on earnings day. Over the past 12 quarters AEO has sold off on earnings day 8 times with an average move of 8.17%. The stock has also sold off 7 times in 12 quarters from earnings day to the nearest options expiration. AEO also appears very weak on a chart going into the release. The stock is trading at the bottom of the Ichimoku Cloud on the daily bar, and looks as if it could break to the downside in today’s session. Due to the stock’s historical performance on earnings day and weak technical data, it is hard to justify anything but a bearish trade in AEO.
The options market is currently implying a move of around $1.45 or 9.1% in AEO by this Friday’s close giving us a downside target around $14.23.
Potential Bearish Earnings Trade: Buying the AEO May 22nd Weekly 15-14 Put Spreads for $0.25
Risk: $25 per 1 lot
Reward: $75 per 1 lot
United Parcel Service, Inc. (UPS) is a major player in shipping and delivering packages. UPS is trading at $102.58 around the middle of its 52 week range of $94.05-$114.40. Year to date the stock has underperformed the market, dropping by $8.53 or 7.67%. The stock is higher today by about 0.75%. This move happened after an unusually large number of bullish options hit the tape.
Almost 20 minutes after the opening bell a trader bought 4.460 of the UPS May 29th Weekly 103 Calls for $0.55 when the stock was trading at $101.83. This order was one of the first ones recorded on OptionHacker and the stock rose almost $1.00 after the trade hit the tape. Over 11,000 contracts on that line have been traded today. The stock has rallied to $102.78 and these calls moved higher with it. These calls have traded as high as $1.06 today making this a highly profitable trade.
Trade: A trader bought 4,460 of the UPS May 29th Weekly 103 Calls for $0.55
Risk: $55 per 1 lot
This trade doubled in value and continued to push past that. If a trader would have purchased a 20 lot of these calls they would have seen profits of $1,020 at the highs on $1,100 in risk. This trade is a great example of hugely profitable weekly unusual options activity.
Reynolds American, Inc. (RAI) manufactures and sells various tobacco products. RAI is trading at the upper end of the 52-week range of $55.22-$77.68 around $76.94. Year to date the stock has performed fairly well appreciating by almost 20%. Today RAI has been weak, selling off by $0.57 or .74%. About an hour after the open an unusually large bullish options bet hit the tape.
Initially a trader bought 4,054 of the RAI June 80.0 Calls for $0.65 when the stock was trading at $76.65. As one of the first few recordings on OptionHacker, the stock drove a few cents higher, but fell a few minutes later reaching a trough at $76.52. Over 8,400 of those contracts have been traded. Although the stock is down $0.57 the call premiums rose by about $0.10.
Trade: A trader bought 4,054 of the RAI June 80.0 Calls for $0.65
Risk: $65 per lot
The stock moved higher after these calls hit the tape and the calls moved with it. They have traded as high as $0.75 today meaning a trader could have netted a $200 profit on a 20 lot.
Cree, Inc. (CREE) manufactures LED, lighting, and semiconductor products for a wide array of applications. CREE is currently trading around $31.25 in a 52 week range of $27.25-$53.33. The stock has been relatively weak this year with shares falling by over 2.8% year to date. The stock is making a strong rally today with shares pushing higher by around 5%. This move higher CREE happened immediately after some very bullish unusual options activity hit the tape.
Early in the session a trader bought 1,000 of the CREE May 22nd Weekly 30.5 Calls for $0.43 when stock was trading $30.13. This alert was the first order to hit OptionHacker and the stock ripped higher after these calls hit the tape. Over 4,000 contracts have now traded on that line. CREE moved to session highs of $31.38 and these calls moved higher with the stock. These calls have now traded as high as $1.05 on the day making this trade a huge winner.
Trade: A trader bought 1,000 of the CREE May 22nd Weekly 30.5 Calls for $0.43
Risk: $43 per 1 lot
This trade more than doubled in value over the course of an hour. If a trader would have bought a 20 lot of these options they would have seen profits of $1,240 at the highs on $860 in risk. This is another great example of hugely profitable weekly unusual options activity.
Bed Bath & Beyond Inc. (BBBY) closed today’s trading session around $73.35, gaining just over 5.3% on the day. BBBY has been trading in a 52 week range of $54.96-$79.64. The stock has been underperforming the market this year with shares falling by 3.7% year to date. Although investors may be unhappy with the stock’s performance this year options traders were able to clean up today as the stock ripped after some bullish unusual options activity it the tape.
Earlier this morning a trader bought 1,418 BBBY May 70.5 calls for $0.46 when the stock was trading $70.77. Over 4,700 contracts traded on this line as the stock ripped to session highs of $73.55. These calls exploded in value as the stock moved higher and traded as high as $2.81 on the day. This move happened in a matter of hours and the position expired on the close today. The calls closed only slightly off of their highs at $2.68. This means that a trader that bought these calls would have seen their position increase in value by a factor of 6. This is another example of a blowout UOA trade.
Trade: A Trader bought 1,418 BBBY May 70.5 calls for $0.46
Risk: $46 per 1 lot
If a trader would have bought a 20 lot of these calls, risking $920, they would have profited
$4,700 at the highs.
Youku Tudou Inc.(YOKU) is a Chinese based internet television company that allows users to share video content on a broad range of devices. The company’s stock is currently trading around $22.85 in a 52 week range of $11.85-$24.60. The stock has been massively outperforming the market this year with shares rallying over 28% year to date. Options activity in the name today seems to suggest that traders are expecting this run higher to continue.
Earlier in today’s session several large blocks of calls were bought in YOKU. A trader bought nearly 3,000 YOKU May 22nd Weekly 22 calls for $1.04. Shortly after that order hit the tape another block of 1,000 YOKU May 22 calls were bought for $0.20. By the end of the day over 8.4 times YOKU’s average daily options volume had traded and at the money implied volatility touched new 52 week highs.
YOKU stock ripped higher after these calls were bought and gained over 17% on the trading day. These calls moved higher as well with the May 22nd Weekly 22 calls trading as high as $2.00 on the day and the May 22 calls trading as high as $0.95 making both of these trades absolute blowout winners. These trades are amazing examples of how following unusual options activity in weekly and short expiration options can lead to huge profits.
Credit Suisse Group AG (CS) is currently trading around $27.00 in a 52 week range of $21.01-$30.84. The stock has been performing relatively well this year with shares rallying more than 7.5% year to date. CS saw some interesting unusual options activity in today’s session and traders quick enough to follow it saw some very nice profits.
Early in the session a trader bought 1,100 CS Jun 27 Calls for $0.75. By the end of the day nearly 12,000 contracts traded on that line and nearly 5 times the average daily options volume in CS had come across the tape. The stock moved to the upside after these calls hit and the calls did as well. At the highs of the session these calls traded as high as $0.90 on the day making this a very profitable trade in a short period of time. With CS trading well above the cloud and showing other bullish momentum metrics it seems likely that this trend will continue.
Trade: A trader bought 1,100 CS Jun 27 Calls for $0.75
Risk: $75 per 1 lot
This trade may not be an absolute blowout winner but a trader that bought a 20 lot of these calls would have profited $300 at the highs on $1500 in risk. That’s a 20% profit on risk in a matter of hours.
My favorite technical indicator is the Ichimoku Cloud also referred to as known as “The Cloud.” This indicator is a free plug-in on TradingView, but a trader must know which time frame to use for the indicator. The Ichimoku works best on the 4 Hour bar for forex and today we see a great signal for a mild pullback trader who likes to trade with the trend.
Let’s breakdown the trade:
Short EUR/USD at 1.378 at 12PM CST on the close of the bar
STOP LOSS: 1.3835
Target #1: 50% of the Stop: 1.3752
Target #2: 100% of the Stop: 1.372
Target #3: 150% of the Stop: 1.369
Target #4: 200% of the Stop: 1.3656
Once I hit Target #2, if I want, I can move my stop to breakeven.
Plug Power Inc. (PLUG) is an alternative energy technology provider which engages in the design, development, commercialization, and manufacturing of fuel cell systems for markets around the world. We have noticed some interesting unusual options activity in PLUG during today’s trading session. Earlier today, a trader bought 7,000 of the PLUG Apr 4th weekly 7 puts for $0.80. This is a very large order that had this trader putting $560,000 at risk. We believe that order flow this strong sets up well for a short in PLUG with a good reward to risk set up.
My Trade: I bought the PLUG Apr 4th Weekly 7 Puts for $.80
Risk: $80 per 1 lot
Reward: $620 per 1 lot
Greeks of this Trade: