Long Term Trade of the Day GNC

GNC Holdings Inc (GNC) is a specialty retailer of health products in the U.S. and 54 countries around the world. The company’s stock is currently trading around $54.95 in a 52 week range of $30.92-$55.85. GNC has had a huge run this year, rallying over 66% year to date. After seeing some very bullish order flow in GNC yesterday we see continuation of that trade into today’s session. Yesterday a trader bought 2,000 GNC Nov 55 calls for $2.75. Earlier in today’s session we saw traders adding to this position, buying nearly 1,500 more GNC Nov 55 calls for $1.60. The chart is still supporting a long in GNC and continued buying of these calls confirms the rationale for a long. Today we will look at an options strategy that gets a trader long GNC, short premium, and short implied volatility. As always this trade also provides a great risk vs. reward set up. (more…)

Covered Call of the Day GERN

Geron Corporation (GERN) is a biopharmaceutical company developing clinical stage treatments for myelofibrosis and similar disorders. Shares of GERN are rallying over 24% in today’s trading session on heavy option volume.  Today’s move adds to strength we have seen in GERN this year as the stock is now up over 172% year to date. Options action would suggest even more upside in GERN as large block put sellers are coming into the market today. Earlier in today’s trading session a trader sold 15,000 GERN Nov 4 puts for $0.70. This is an extremely bullish order and adds to the already bullish options sentiment in GERN. We believe that this options activity confirms the move higher in GERN and signals as an opportunity for a covered call in GERN. (more…)

Earnings Trade of the Day EBAY

eBay Inc (EBAY) is a tech company that provides services and tools for individuals, small businesses, and merchants engage in commerce online.  The company’s stock is currently trading around $53.70 in a 52 week range of $45.66-$58.04. The stock has underperformed the broader market this year, rallying only 5.9% year to date. EBAY is set to report their most recent quarterly earnings today after the market close. EBAY has performed relatively well on earnings day over the past 8 quarters. The stock has rallied 5 times on the release of the last 8 earnings reports with an average move of 6.2%. The options market is currently implying a move of around 5% by this Friday’s expiration.  EBAY is currently trading above the Ichimoku Cloud meaning it is in bullish territory technically. With the strong historical earnings performance in EBAY and the relatively bullish chart we believe that EBAY sets up well for a long into earnings. (more…)

Bullish Signals

A trader bought 1,625 INFI Dec 15 Calls for $1.90 (3.0 times usual volume) with stock at $14.16
A trader bought 1,000 CIM Dec 3 Calls for $0.15 (3.4 times usual volume) with stock at $3.02
A trader bought 4,000 RHI Nov 40 Calls for $1.25 (31.9 times usual volume) with stock at $39.43
A trader bought 2,200 MAR Oct 43 Calls for $0.20 (3.1 times usual volume) with stock at $42.27
A trader bought 1,700 ASH Nov 95 Calls for $1.14 (3.1 times usual volume) with stock at $88.60

Bearish Signals

A trader bought 1,200 AKG Nov 2.5 Puts for $0.45 (5.5 times usual volume) with stock at $2.13
A trader bought 1,383 ZMH Oct 85 Puts for $0.25 (3 times usual volume) with stock at $87.35
A trader bought 2,100 LTD Oct 55 Puts for $0.20 (3.5 times usual volume) with stock at $56.90
A trader bought 7,000 WFM May 55-52.5 Put Spreads for $0.70 (2.7 times usual volume) with stock at $61.76

Unusual Option Activity

A trader bought 2,200 MAR Oct 43 Calls for $0.20 (3.1 times usual volume) with stock at $42.27
A trader bought 1,700 ASH Nov 95 Calls for $1.14 (3.1 times usual volume) with stock at $88.65
A trader bought 2,100 LTD Oct 55 Puts for $0.20 (3.5 times usual volume) with stock at $56.90
A trader bought 7,000 WFM May 55-52.5 Put Spreads for $0.70 (2.7 times usual volume) with stock at $61.76
A trader bought 2,200 MAR Oct 43 Calls for $0.20 (3.1 times usual volume) with stock at $42.27

Long Term Trade of the Day

Energen Corporation (EGN) is an energy holding company that operates in the development, exploration and production of oil and natural gas in the U.S. The company’s stock is currently trading around $81.65 in a 52 week range of $41.38-$82.70. The stock has been massively outperforming the market this year, rallying nearly 81% year to date. Options traders seem to believe this run can continue as we have seen extremely bullish unusual option activity in EGN this morning. A large 4 legged spread traded this morning as a trader sold 2,500 Jan 70 puts and 2,500 Jan 60 puts for $1.05 and $0.20 respectively. A 5,000 lot of the Jan 80-100 Call spreads bought for $3.35 were also tied to this order. This is a very bullish order and shows a high level of conviction. This trade is taking on a huge amount of risk to put this position on. We believe that this is a great signal to get long EGN. We will look at a trade that has a better risk vs. reward set up than the block trader got.

Trade: Buy the EGN April 85-95 Bull Call Spread for $3.00
Risk: $300 per 1 lot
Reward: $700 per 1 lot
Breakeven: $88.00

EGN