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.

REEs consist of roughly 17 mineral types which naturally occur in ore deposits.  These materials are used in industries ranging from aerospace to downstream oil and gas, with specific applications in nuclear batteries, fluorescent lamps, stainless steel, and various laser types.  Of most interest to traders is the fact these elements are not exchange traded like metals, but sold only on the private market making price tracking difficult.  Compounding this problem is they are not usually sold in pure form, but in mixtures of varying purity based on the use case.

Despite the forecast for increased demand, Molycorp announced a loss of $0.44 per share on their call.  The company misses production targets significantly in their California mine – demand for REEs is inconsequential if you can’t fill the orders.  The most positive recent news the company, which while sitting on the largest REE mine in the world can’t seem to meet production targets was a recent SEC announcement.  In July, the SEC announced their would be no enforcement action regarding ‘irregularities in the company’s public disclosures.’   

Yesterday’s Earnings Trade:Selling the MCP Weekly 7-8 Bear Call Spread for $0.44 Credit.

This is selling the Weekly 7 Calls and buying the Weekly 8 Calls

My Risk: $56 per 1 lot
My Reward: $44 per 1 lot
My Breakeven: $7.44

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