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
Reward: Unlimited
Breakeven: $18.65

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
Stop: $41.61
Targets: $42.35 and up every $0.25

Intel Corporation (INTC) is a designer and manufacturer of microprocessors and chipsets. The company’s stock is currently trading around $25.13 in a 52 week range of $20.75-$27.12. The stock has been underperforming the market this year with shares falling just over 3.2% year to date. Despite this relative weakness we have seen some very large bullish bets being made on INTC during today’s trading session. Earlier in the session a trader bought 12,362 INTC Oct 30 Calls for $0.24. Over 26,000 contracts have now traded on that line against open interest of only 3,800. INTC is currently trading in neutral territory according to the Ichimoku Cloud but it appears like it could be ready to test the top of the cloud near $25.25. This trader is likely anticipation this breakout and these calls should be profitable if INTC breaks out from the cloud. With such a low level of premium involved in this trade we believe it sets up well on a reward to risk basis.

Trade: Buying the INTC Oct 30 calls for $0.25
Risk: $25 per 1 lot
Reward: Unlimited
Breakeven: $30.25

Orbitz Worldwide, Inc. (OWW) is an online travel company that has operations around the globe. The company’s stock is currently trading around $8.25 in a 52 week range of $5.19-$13.26. The stock is up over 15% year to date despite the stock selling off more than 8% today on a downgrade from Goldman Sachs. Goldman downgraded the stock from neutral to sell but options traders seem to think the stock has fallen to attractive levels. Order flow in OWW has been decidedly bullish with more than 9.5 the average daily option volume already trading in the name. The biggest order to hit the tape today was from a buyer of the OWW May 10 calls. A trader bought 2,000 of the OWW May 10 calls for $0.35 when stock was trading $8.17. This is a very bullish trade and it would appear this trader is hoping OWW finds buyer at these levels. With shares still trading above the Ichimoku Cloud OWW could be setting up well here for an aggressive long.

Trade: Buying the OWW May 10 Calls for $0.35
Risk: $35 per 1 lot
Reward: Unlimited
Breakeven: $10.35

Herbalife Ltd. (HLF) is a nutrition company that sells weight management, targeted nutritional products, and personal care products worldwide.  HLF has been one of the most debated stocks in the market over the past year. The debate centers on claims by activist investor Bill Ackman that HLF’s operations fit the definition of a pyramid scheme. Ackman announced a large short position in the stock with a price target of zero. Activist investor Carl Ichan then announce he was taking a large stake in the company and since then the two have battled it out on CNBC on a few occasions. I don’t know what the future holds for HLF but on the announcement of a civil probe by the Federal Trade Commission into the company’s operations the stock has plummeted. Today a trader bought 1,700 HLF April 47.5 Puts for $2.49 indicating they belive the stock will head lower. Let’s breakdown this trade, this trader has the right but not obligation to sell 170,000 shares of stock at $47.50 and is paying around $300,000 for this right. With a breakeven of around $45.00 this trader is thinking the stocks tests at least that low.

Hewlett-Packard Company (HPQ) together with its subsidiaries provides products, technologies, software, solutions and services to individual consumers, small-and medium-sized businesses (SMBs), and large enterprises.  A trader took a HUGE bullish stance today when a trader bought over 10,000 HPQ march 30.5 Calls for $.24.  This trader has the right, but not obligation to buy $1 million shares of HPQ at $330.50 between now and the end of the week.  Calls are bought for one of two reasons, speculation to the upside or a hedge against a short stock position.  I think this trader expects to see more upside, so I bought the HPQ march 30.50 Calls for $.24

My Risk: $24 per 1 lot
My Reward: Unlimited
Targets: Sell 33% at $.40, Sell 33% at $.50, Sell 33% at $.65

Endocyte, Inc. (ECYT) is a bio-pharmaceutical company that develops targeted therapies for the treatment of cancer and inflammatory diseases.  One way to calculate how much a stock can move is to look at the ATM Straddle to get two Measured Move Targets.  The ECYT ATM April 15 Straddle is priced at $6.80 implying the stock can move to either $21.80 or $9.20 by April expiration.  Obviously, by the high implied volatility we can tell that there will be a drug announcement in April.  One trader thinks the stock can move to $23.25 as we saw a trader buy ECYT April 22.5 calls for $.75.

Their Risk: $75 per 1 lot
Their Reward: Unlimited
Their Breakeven; $23.25

ConocoPhillips (COP) is an integrated oil and gas company with operations around the globe. The company’s stock is currently trading around $67.95 in a 52 week range of $56.38-$74.59. The stock has been underperforming the market this year with shares falling by around 3.75% year to date. Options action in COP during this morning’s trading session would suggest that traders believe this trend will reverse and that the stock will be strong through April expiration. Earlier this morning a trader bought 9,106 COP Apr 70 calls for $0.35. This is an extremely bullish bet that also represents volume more than 3.5 times the average daily option volume in COP. The COP chart is technically not in bullish territory according to the Ichimoku Cloud. However, the stock is very close to the top of the cloud and could be poised for a breakout. With shares of COP approaching breakout territory and strong bullish order flow we believe that COP is setting up well for a long position.

Trade: Buying the COP Apr 70 Calls for $0.35
Risk: $35 per 1 lot
Reward: Unlimited
Breakeven: $70.35

The iShares MSCI South Korea Capped ETF (EWY) seeks to track the investment results of an index composed of South Korean equities. The chart looks weak and it seems as if it wants to break the Ichimoku Cloud to the downside. Today, a trader bought 2,500 EWY April 58 Puts for $.85. Puts are bought for 1 of 2 reasons, speculation to the downside or as a hedge against a long stock position. With the chart looking so weak, I think the trader thinks there is more potential downside and with the breakeven of this trade at $57.15 a trader thinks that EWY can take out the 52 week lows. I have no position in this stock right now, but will be looking to get short if I notice more bearish activity.