A trader sold 26,720 WFC Oct 45 calls for $0.64. These calls traded at a price below the market makers current bid meaning this was an aggressive short.  This trader believes that WFC will close below $45.00 on October expiration and is taking on a huge level of risk in this position. These calls also give this trader exposure to WFC’s next earnings announcement on October 11^th. WFC has down ticked slightly since the trade was executed and is down $0.05 (0.12%) on the day.

Unusual Option Activity:

We define unusual option activity as large block trades that represent a large percentage of daily option volume. The block trade is considered “unusual” if the option volume is above the average daily volume over the past 22 days. At KeeneOnTheMarket.com we scan and analyze order flow from all of the major options exchanges in order to identify any unusual option activity.

Analyzing unusual order flow gives traders a window into what the positions that large institutional players have. The majority of unusual option activity can be traced back to hedge funds, mutual funds, and other large institutions. Knowing where these institutions are placing their bets can be hugely advantageous for any trader. These institutions have informational and technological advantages that the average trader doesn’t have, and the amount of time and analysis that goes into every one of their trades is substantial.  We offer this service through our 7 hour daily LIVE trading room http://bit.ly/135QWt8 or through Premium Twitter feed with all entries, exits, and unusual options activity tweeted all day long: http://bit.ly/11f0L9u .

Order flow can however at times be deceiving. One might logically thing that a large block buyer of calls is bullish on the underlying. This is not always the case. Remember that a large number of participants in the equity options market are hedgers. Long calls are a hedge against short stock, and long puts are a hedge against long stock. With this in mind we have developed a 7 step trading plan that helps filter out unusual option activity that will not provide actionable trade setups. It is by using this plan that we are able to identify the most significant unusual options activity trades every day.

The “Institutional Trade”:  Today, a trader sold 28,800 WFC Oct 45 Calls for $.64
Their Risk: Unlimited
Their Reward: $64 per 1 lot
Their Breakeven: $45.64
Cash Received: $1,843,200

Greeks of this Trade
Delta: Short
Gamma: Short
Theta: Long
Vega: Short

We define unusual option activity as large block trades that represent a large percentage of daily option volume. The block trade is considered “unusual” if the option volume is above the average daily volume over the past 22 days. At KeeneOnTheMarket.com we scan and analyze order flow from all of the major options exchanges in order to identify any unusual option activity.

Analyzing unusual order flow gives traders a window into what the positions that large institutional players have. The majority of unusual option activity can be traced back to hedge funds, mutual funds, and other large institutions. Knowing where these institutions are placing their bets can be hugely advantageous for any trader. These institutions have informational and technological advantages that the average trader doesn’t have, and the amount of time and analysis that goes into every one of their trades is substantial. We offer this service through our 7 hour daily LIVE trading room http://bit.ly/135QWt8 or through Premium Twitter feed with all entries, exits, and unusual options activity tweeted all day long: http://bit.ly/11f0L9u .

Order flow can however at times be deceiving. One might logically thing that a large block buyer of calls is bullish on the underlying. This is not always the case. Remember that a large number of participants in the equity options market are hedgers. Long calls are a hedge against short stock, and long puts are a hedge against long stock. With this in mind we have developed a 7 step trading plan that helps filter out unusual option activity that will not provide actionable trade setups. It is by using this plan that we are able to identify the most significant unusual options activity trades every day.

Also, the company is in the process of buying Composite Software, provider of software services, for about $180 million, and the deal will be finished by Q1 of 2014. In the past year and a half, CSCO has clearly been expanding its arsenal of computing holdings as nearly 90% of the past acquisitions were software companies. In addition to general expansion initiatives, analysts also expect CSCO to report positive earnings due to increased demand for carrier routing, wireless services, and pay-per-view TV which should carry CSCO until at least the end of the year. After upping her CSCO price target to $30, Simona Jankowski, a Goldman Sach’s analyst, said, “we expect Cisco to report a solid F4Q quarter on improving enterprise networking demand, higher carrier capex, and strong execution, with EPS upside aided by better gross margins.” Another analyst for BMO Capital, Tim Long, said that “Cisco continues to execute well, and all the signs are pointing to Cisco reporting strong results. Along with an improving enterprise IT spending environment, better Telco spending will also help. We expect management to guide conservatively, but something in the range of 4% – 7% year-over-year growth … seems realistic.” Experts predict an EPS of $0.51 on total revenue of $12.40 billion, an increase of $0.71 billion from the year-earlier quarter. For the full fiscal 2013 year, analysts anticipate CSCO to have an EPS of $2.01 on revenue of $48.60 billion.

By following this system for Earnings every trade I take, I greatly improve my odds of achieving a profitable trading record over the medium and long-term.  In the second half of my book, Keene On The Market: Trade to Win Using Unusual Options Activity, Volatility, and Earnings I describe this plan in much greater detail.  I also discuss two other trading plans – my non-blowout trading plan for risk management, and my strategy for setting up trades for earnings reports.  The first half of the book is dedicated to explaining a range of options strategies (including synthetic options), the Greeks, and other trading techniques.  Signed copies are available through my website, www.KeeneOnTheMarket.com

The CSCO Aug 26 Straddle is priced at $1.75 implying the stock will move 6.7% move in either direction. I want to get long CSCO, because the chart looks great, but I want to have a good reward to risk set-up.

My Trade: Buying the CSCO August 27-28 Bull Call Spread for $.25


Risk: $25 per 1 lot


Reward: $75 per 1 lot


Reward to Risk: 3-1


Breakeven: $27.25

Greeks of this Trade:

Delta: Long


Gamma: Long


Theta: Short


Vega: Long

We define unusual option activity as large block trades that represent a large percentage of daily option volume. The block trade is considered “unusual” if the option volume is above the average daily volume over the past 22 days. At KeeneOnTheMarket.com we scan and analyze order flow from all of the major options exchanges in order to identify any unusual option activity.

Analyzing unusual order flow gives traders a window into what the positions that large institutional players have. The majority of unusual option activity can be traced back to hedge funds, mutual funds, and other large institutions. Knowing where these institutions are placing their bets can be hugely advantageous for any trader. These institutions have informational and technological advantages that the average trader doesn’t have, and the amount of time and analysis that goes into every one of their trades is substantial. We offer this service through our 7 hour daily LIVE trading room http://bit.ly/135QWt8 or through Premium Twitter feed with all entries, exits, and unusual options activity tweeted all day long: http://bit.ly/11f0L9u .

Order flow can however at times be deceiving. One might logically thing that a large block buyer of calls is bullish on the underlying. This is not always the case. Remember that a large number of participants in the equity options market are hedgers. Long calls are a hedge against short stock, and long puts are a hedge against long stock. With this in mind we have developed a 7 step trading plan that helps filter out unusual option activity that will not p

We define unusual option activity as large block trades that represent a large percentage of daily option volume. The block trade is considered “unusual” if the option volume is above the average daily volume over the past 22 days. At KeeneOnTheMarket.com we scan and analyze order flow from all of the major options exchanges in order to identify any unusual option activity.

Analyzing unusual order flow gives traders a window into what the positions that large institutional players have. The majority of unusual option activity can be traced back to hedge funds, mutual funds, and other large institutions. Knowing where these institutions are placing their bets can be hugely advantageous for any trader. These institutions have informational and technological advantages that the average trader doesn’t have, and the amount of time and analysis that goes into every one of their trades is substantial. We offer this service through our 7 hour daily LIVE trading room http://bit.ly/135QWt8 or through Premium Twitter feed with all entries, exits, and unusual options activity tweeted all day long: http://bit.ly/11f0L9u .

Order flow can however at times be deceiving. One might logically thing that a large block buyer of calls is bullish on the underlying. This is not always the case. Remember that a large number of participants in the equity options market are hedgers. Long calls are a hedge against short stock, and long puts are a hedge against long stock. With this in mind we have developed a 7 step trading plan that helps filter out unusual option activity that will not provide actionable trade setups. It is by using this plan that we are able to identify the most significant unusual options activity trades every day.

We define unusual option activity as large block trades that represent a large percentage of daily option volume. The block trade is considered “unusual” if the option volume is above the average daily volume over the past 22 days. At KeeneOnTheMarket.com we scan and analyze order flow from all of the major options exchanges in order to identify any unusual option activity.

Analyzing unusual order flow gives traders a window into what the positions that large institutional players have. The majority of unusual option activity can be traced back to hedge funds, mutual funds, and other large institutions. Knowing where these institutions are placing their bets can be hugely advantageous for any trader. These institutions have informational and technological advantages that the average trader doesn’t have, and the amount of time and analysis that goes into every one of their trades is substantial. We offer this service through our 7 hour daily LIVE trading room http://bit.ly/135QWt8 or through Premium Twitter feed with all entries, exits, and unusual options activity tweeted all day long: http://bit.ly/11f0L9u .

Order flow can however at times be deceiving. One might logically thing that a large block buyer of calls is bullish on the underlying. This is not always the case. Remember that a large number of participants in the equity options market are hedgers. Long calls are a hedge against short stock, and long puts are a hedge against long stock. With this in mind we have developed a 7 step trading plan that helps filter out unusual option activity that will not provide actionable trade setups. It is by using this plan that we are able to identify the most significant unusual options activity trades every day.