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Long Term Trade of the Day

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Energen Corporation (EGN) is an energy holding company that operates in the development, exploration and production of oil and natural gas in the U.S. The company’s stock is currently trading around $81.65 in a 52 week range of $41.38-$82.70. The stock has been massively outperforming the market this year, rallying nearly 81% year to date. Options traders seem to believe this run can continue as we have seen extremely bullish unusual option activity in EGN this morning. A large 4 legged spread traded this morning as a trader sold 2,500 Jan 70 puts and 2,500 Jan 60 puts for $1.05 and $0.20 respectively. A 5,000 lot of the Jan 80-100 Call spreads bought for $3.35 were also tied to this order. This is a very bullish order and shows a high level of conviction. This trade is taking on a huge amount of risk to put this position on. We believe that this is a great signal to get long EGN. We will look at a trade that has a better risk vs. reward set up than the block trader got.

Trade: Buy the EGN April 85-95 Bull Call Spread for $3.00
Risk: $300 per 1 lot
Reward: $700 per 1 lot
Breakeven: $88.00

EGN

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Swing Stock Trade of the Day

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GNC Holdings Inc (GNC) is a specialty retailer of health products in the U.S. and 54 countries around the world. The company’s stock is currently trading around $55.45 in a 52 week range of $30.92-$55.85. GNC has had a huge run this year, rallying over 66% year to date. Unusual option activity we have seen in GNC today tells us that traders believe there is more upside in store for GNC.  Earlier in today’s trading session a trader bought 2,000 GNC Nov 55 calls for $2.75. This would indicate that this trader believes the stock will head higher through November expiration.  The daily chart of GNC also supports the case for a long in the stock. GNC is trading well above the Ichimoku cloud and the cloud is upward sloping into the future. All of these factors are lining up for a long position in GNC stock.

Trade: Buying GNC stock at $55.45 with a stop at $51.21
Risk: $4.24 per share
Target #1: $57.60
Target #2: $59.70
Target #3: $63.90

gnc

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Covered Call Trade of the Day

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Allied Nevada Gold Corp (ANV) is a gold and silver miner in the state of Nevada. The company’s stock is currently trading around $4.15 in a 52 week range of $3.54-$41.02. The stock has been in free fall for most of the year, losing over 86% year to date. Despite the weakness the stock has shown this year we have seen some bullish unusual option activity in ANV today. Earlier in today’s session we saw a trader sell 2,300 of the ANV Dec 4 puts for $0.45. This is a very bullish trade and indicates that this trader strongly believes shares of ANV will be above $4.00 on December expiration. Although the chart is very weak in ANV, this high conviction bet signals the opportunity for a covered call in ANV. This trade will profit if ANV rallies, trades sideways, or even sells off to anywhere above $3.50.

Trade: Buying 100 shares of ANV at $4.15 for every Dec 4 Call sold for $0.65
Reward: $50 per 1 lot
Breakeven: $3.50

Should shares of ANV close above $4.00 on December expiration this trade will net its maximum potential profit of $50 per 1 lot. This trade is also profitable anywhere above $3.50. If the stock closes above $4.00 on expiration this trade will net an annualized return of 109.40%.

ANV

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Earnings Trade of the Day

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Intel Corporation (INTC) is a designer and manufacturer of digital technology platforms consisting of microprocessors and chipsets.  The company’s stock is currently trading around $23.50 in a 52 week range of $19.23-$25.98. The stock has rallied nearly 14% year to date but is only higher by 7.8% over the past 12 months. INTC is scheduled to report their most recent quarterly earnings today after the bell.  The stock has been relatively weak on earnings day over the past 8 quarters. The stock sold off on earnings day 5 of the past 8 quarters with an average move of 2.7%. The options market is currently implying a move of just over 4% by this Friday’s expiration.  This is a large implied move relative to the historical average and can present an opportunity. Knowing the stock only moves 2.7% gives a trader the chance to sell the implied move in INTC. We can approach this in several different ways, but the trade outlined below offers the most efficient and risk controlled way to fade movement in INTC. This trade has a trader short premium and implied volatility but does not have the risk of blowing out an account.

 

Trade: Selling the INTC Oct 23.5 Straddle to Buy the Oct 22-25 Strangle for $0.80 Credit
Risk: $70 per 1 lot
Reward: $80 per 1 lot
Breakeven: $22.70 and $24.30

INTC

 

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FREE Short Stock Swing Trade of the Day: COH 9.17.2013

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Chart Key Emini SP500Coach Inc (COH) is a marketer of accessories for men and women. They provide consumers with a range of accessories including leather goods, handbags, watches and fragrances. The stock is currently trading around $55.40 in a 52 week range of $45.87-$62.26. The stock has been relatively weak this year, selling off around 0.25% year to date in a broader market that is much higher. COH is even weaker over the past 12 months down nearly 11%. Recent bearish order flows in the options market also suggests that sentiment on COH is for more downside. Current open interest put/call ratios are also very bearish at 1.58. Still trading in neutral to bearish territory on the Ichimoku Cloud we believe that COH sets up well at this level for a swing trade.
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Biggest Bullish Activity 9.13.2013

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Bull Market Stocks BondsA trader bought 2,000 HZNP Nov 3 Calls for $0.30 (27 times usual volume) with stock at $2.71
A trader bought 1,000 QTWW Jan 2.5 Calls for $0.30 (5.5 times usual volume) with stock at $2.39
A trader bought 5,469 DVY Oct 67 Calls for $0.34 (6.3 times usual volume) with stock at $66.15
A trader bought 900 DBC Oct 27 Calls for $0.25 (5.5 times usual volume) with stock at $26.24
A trader bought 828 MDC Dec 32 Calls for $1.65 (2.8 times usual volume) with stock at $29.54
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Biggest Bullish Activity 9.12.2013

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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 think 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.

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Biggest Bearish Activity 9.12.2013

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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 think 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.

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Unusual Option Activity 9.12.2013

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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 think 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.

 

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REN Covered Call 9.12.2013

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In Q2 this year, the company’s average production was 13,107 BPOD, 78 percent of which was crude oil.  Resolute’s production assets are based in North America, so there is little risk from exposure to  unrest in the Middle East or other disruptions of a geo-political nature.  Included in these assets are operations in North Dakota’s Baaken reserve.

Yesterday, we saw Paper sell 2,500 REN Dec 10 Puts for $1.80 (27 times unusual volume).  By implementing a covered call strategy, or a ‘buy-write,’ a trader is synthetically short a put.  

To set up this covered call strategy a trader is going to buy 100 shares of stock at $8.30 for every REN Dec 10 Call sold at $0.20. This trade is profitable anywhere above $8.10 and if the stock closes above $10.00 on expiration this trade will net an annualized return of 97.5%.REN_Covered_Call.png