Cheniere Energy, Inc (LNG) is a company engaged in a variety of liquid natural gas related businesses. The company’s stock is currently trading around $39.40 in a 52 week range of $13.85-$39.98. The stock has been extremely strong this year as shares of LNG have rallied nearly 110% year to date and over 146% in the past 12 months. Recent action in the options market is suggesting that this run will continue through next year. Yesterday a trader bought 12,500 LNG Mar 40-50 call spreads for $2.68 and sold 7,500 Mar 31 puts for a $1.00. This is an extremely bullish trade that indicates this trader’s high level of conviction in LNG. The short put component of this trade is extremely risky and suggests that this trader has a strong belief the stock will continue higher through March expiration. The stock is also looking very strong on a chart. Shares of LNG are trading well above the Ichimoku Cloud but are just off of their 52 week highs. The cloud is strongly upward sloping ion the future indicating the stock should remain in in bullish territory. We believe that the unusual option activity yin LNG coupled with its strong chart present us with an opportunity for a long term trade in LNG. We will look at a long term options trade that will allow us to use the inherent leverage of options to take a bullish view on LNG in a very capital effective way. (more…)

Electronic Arts Inc. (EA) is a developer, publisher and distributor of video game software to be played on a variety of devices including consoles, personal computers and mobile devices. The company’s stock is currently trading around $24.45 in 52 week range of $11.90-$28.13. The stock has been outperforming the broader market this year posting gains of over 68%. The stock is also up over 105% in the past 12 months. EA is set to report their most recent quarterly earnings after the close today with analysts expecting EPS of $0.12 on revenues of $979 million. EA has been a strong earnings day performer over the past 6 quarters. The stock has rallied 5 of the past 6 earnings announcements with an average move of 7.4%. Although shares of EA are currently trading below the cloud we believe this strong historical earnings performance gives us a good opportunity to get long EA ahead of earnings. Currently the options market is implying a move of $2.00 higher or lower by November 1^st expiration. Using this implied move we can calculate an upside target of $26.50 for Friday’s close. Using this target we can now set up a trade.

Trade: Buying the EA Nov 1^st Weekly 25.5-26.5 Call Spread for $0.25
Risk: $25 per 1 lot
Reward: $75 per 1 lot
Breakeven: $25.75

A trader bought 2,500 RLGY Dec 50 Calls for $0.80 (2.3 times usual volume) with stock at $43.46
A trader bought 1,500 TRMB Nov 30 Calls for $0.50 (9.1 times usual volume) with stock at $28.72
A trader bought 10,000 MAS Jan 26 Calls for $0.25 (5.4 times usual volume) with stock at $21.06
A trader bought 18,965 XLP Dec 43 Calls for $0.44 (3.5 times usual volume) with stock at $42.52
A trader bought 10,000 PBR Jan 20 Calls for $0.21 (2.8 times usual volume) with stock at $17.31

A trader bought 969 HW Dec 9 Puts for $0.50 (7 times usual volume) with stock at $9.47
A trader bought 1,500 MOVE Nov 15 Puts for $0.20 (13.4 times usual volume) with stock at $17.29
A trader bought 2,500 DOLE Dec 12-10 Put Spreads for $0.07 (9.7 times usual volume) with stock at $13.69
A trader bought 1,000 ECL Nov 105 Puts for $2.30 (5.7 times usual volume) with stock at $104.34

A trader bought 10,000 MAS Jan 26 Calls for $0.25 (5.4 times usual volume) with stock at $21.06
A trader bought 18,965 XLP Dec 43 Calls for $0.44 (3.5 times usual volume) with stock at $42.52
A trader bought 10,000 PBR Jan 20 Calls for $0.21 (2.8 times usual volume) with stock at $17.31
A trader bought 1,000 ECL Nov 105 Puts for $2.30 (5.7 times usual volume) with stock at $104.34
A trader bought 1,500 MOVE Nov 15 Puts for $0.20 (13.4 times usual volume) with stock at $17.29

Resolute Energy Corporation (REN) is an oil and gas company that is engaged in the exploration and acquisition of oil and gas properties in the U.S. The stock is currently trading around $9.50 in a 52 week range of $7.41-$11.56. The stock has rallied over 16% this year and recent order flows in the options market lead us to believe there could be more upside in REN to come. Last week a trader bought 2,000 REN Nov 10 calls for $0.35. While this may not be a huge order, action in the U.S. gas and oil space has been indicating that traders expected significant upside in the industry. Most of the options action points to these stocks heading higher through the end of the year and we believe that REN sets up well here for a long term buy.  We will look to use deep in the money calls as a stock replacement strategy. This allows a trader to use the inherent leverage of options to take a long view on REN in a much more capital efficient way than simply buying the stock. (more…)

A trader bought 1,000 EVEP Dec 40 Calls for $0.60 (2.1 times usual volume) with stock at $36.77
A trader bought 7,500 XCO Jan 7 Calls for $0.45 (7.9 times usual volume) with stock at $6.62
A trader bought 2,100 OLN Dec 25 Calls for $0.25 (4.8 times usual volume) with stock at $22.23
A trader bought 2,500 LYB Nov 80 Calls for $0.60 (2.9 times usual volume) with stock at $75.81
A trader bought 3,000 AVP Nov 23 Calls for $0.45 (2.9 times usual volume) with stock at $21.74

A trader bought 4,110 SEE Jan 17.5 Puts for $0.70 (7.6 times usual volume) with stock at $28.45
A trader bought 1,500 LH Nov 97.5 Puts for $0.70 (11.3 times usual volume) with stock at $99.97
A trader bought 4,300 SAP Jan 77.5 Puts for $2.50 (2.4 times usual volume) with stock at $79.51
A trader bought 6,300 GRA Mar 90 Puts for $5.80 (9 times usual volume) with stock at $91.45

A trader bought 1,500 LH Nov 97.5 Puts for $0.70 (11.3 times usual volume) with stock at $99.97
A trader bought 4,300 SAP Jan 77.5 Puts for $2.50 (2.4 times usual volume) with stock at $79.51
A trader bought 6,300 GRA Mar 90 Puts for $5.80 (9 times usual volume) with stock at $91.45
A trader bought 2,500 LYB Nov 80 Calls for $0.60 (2.9 times usual volume) with stock at $75.81
A trader bought 3,000 AVP Nov 23 Calls for $0.45 (2.9 times usual volume) with stock at $21.74

Sanmina Corporation (SANM) provides integrated manufacturing solutions to original equipment manufacturers in a number of different industries. The company’s stock is currently trading around $16.85 in a 52 week range of $7.58-$18.44. The stock has been performing very well this year, outpacing the broader market, rallying over 52% year to date. Unsual options activity in yesterday’s trading session suggests that traders believe this trend in SANM will continue through the end of November. In midafternoon trading yesterday a trader sold 2,500 SANM Nov 16 puts for $0.60. This is a very bullish trade as this trader is accepting large amounts of risk in hopes shares of SANM stay above $16.00 through November expiration. SANM is rallying today on the back of the bullish activity from yesterday. The stock is also trading well on a chart with the Ichimoku Cloud suggesting there could be more upside in store for SANM. We believe that these signals provide a great opportunity for a covered call in SANM. (more…)