The “Institutional Trade”: On Friday a trader bought 1500 ERJ July 35 Calls for $.85

Risk: $85 per 1 lot
Reward: Unlimited
Breakeven: $35.85
Cash Outlay: $127,500

Today, these Calls are worth $2, lets take a look at their Profits:

1500 * (2.00- .85) * 100= $165,000 in Profits

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  HYPERLINK “http://bit.ly/135QWt8” http://bit.ly/135QWt8 or through Premium Twitter feed with all entries, exits, and unusual options activity tweeted all day long:  HYPERLINK “http://bit.ly/11f0L9u” 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.  

Paper bought 650 TEX Jun 32 Puts for $4.03 (3.3 times usual volume) with stock at $27.98
Paper bought 193 KNDI Jun 7.5 Puts for $0.50 (4.1 times usual volume) with stock at $8.01
Paper bought 200 PVR Nov 22.5 Puts for $0.75 (3 times usual volume) with stock at $27.09
Paper bought 7,230 UPL Jun 25 Puts for $3.30 (4.3 times usual volume0 with stock at $21.75

Paper bought 1,500 WLT Jan 20 Calls for $0.93 (2.6 times usual volume) with stock at $12.04
Paper bought 16,000 SE Sep 36 calls for $1.10 (7.8 times usual volume) with stock at $34.70
Paper bought 2,000 ABV Jan 46 Calls for $0.45 (6.3 times usual volume) with stock at $36.79
Paper bought 1,198 KR Jul 35 Calls for $1.30 (3.7 times usual volume) with stock at $35.19
Paper bought 200 BEAT Jul 6 Calls for $1.04 (23.7 times usual volume) with stock at $6.04

Paper bought 2,300 LULU Jul 60 Puts for $0.89 (2.6 times usual volume) with stock at $65.97
Paper bought 6,153 TRGT Aug 5 Puts for $0.675 (12 times usual volume) with stock at $4.99
Paper bought 951 MDRX Jun 13 Puts for $0.15 (3.4 times usual volume) with stock at $13.61
Paper bought 1,500 BIG Oct 27.5 Puts for $0.90 (2.2 times usual volume) with stock at $33.17
Paper bought 150,000 SIRI Jul 3 Puts for $0.06 (10.6 times usual volume) with stock $3.27

Paper bought 1,830 SE Sep 33 Calls for $1.75 (5.7 times usual volume) with stock at $33.40
Paper bought 1,079 MAS Jul 19 Calls for $1.40 (9.5 times usual volume) with stock at $19.67
Paper bought 1,000 GTIV Jul 12.5 Calls for $0.25 (55.6 times usual volume) with stock at $11.19
Paper bought 500 SWI Sep 40 Calls for $3.50 (2.4 times usual volume) with stock at $36.91
Paper bought 2,900 EDZ Jan 58 Calls for $12.50 (4.3 times usual volume) with stock at $60.80