American International Group, Inc. (AIG) is a global insurance company providing various insurance and financial services to people in more than 130 countries. Shares of AIG are currently trading around $48.50 in a 52-week range of $30.64-$53.33. The stock has been outperforming the broader market this year adding over 34% to share prices year to date. Yesterday’s trading session saw some unusual options activity that indicates traders believe the run in AIG can continue through May of next year. Early in yesterday’s session a trade bought 67,875 AIG May 55 calls for $0.86 and 45,202 May 50 calls for $2.33. These are hugely bullish bets that require an enormous amount of premium. The sheer size of this trade suggests that this trader has a strong belief in further upside in AIG. Although AIG has broken through some key technical levels on a chart the Ichimoku Cloud is still relatively bullish looking. The cloud remains upward sloping indicating strength in AIG. We believe that this big block trade coupled with the strength in AIG this year provides us with a great opportunity for a long-term trade.
Trade: Buying the AIG May 44 Calls for $6.20
Risk: $620 per 1 lot
Reward: Unlimited
Breakeven: $50.20
