The string of unusual options trades continues this morning as the overall market tumbles. While a lot of puts are being bought, it appears more likely that they are buying puts for protection at this point. Mixed in with the puts are some occasional big call buys. Here’s the most notable options trades this morning in GNC Corp (GNC), Encana Corp (ECA), and Global X Social Media ETF (SOCL).
GNC Corp (GNC)
We just saw a trader bulking up on GNC September $37.5 calls. The investor bought 2,000 of the calls at a price of $1.35, so he/she is clearly expecting GNC’s stock price to get pumped up in the near term. Of course, the stock is up big today, up $1.25 to $35.60 on the day. The value of that little bet is $270,000.
Not alot going on in the news for GNC Holdings, so we have to assume this big call buyer is betting on an impending analyst upgrade, or some positive numbers have leaked on the company’s impending earnings release on July 21.
GNC is currently rated a HOLD, with an average price target of $44.50, by 17 analysts. So there is a good chance that HOLD rating may be upgraded to a buy given the current price target versus current price.
Encana Corp (ECA)
Encana gets some interesting options action on a regular basis. Today well connected investor closed out 12500 July $22 calls AND 10,000 July $21 calls, and then rolled it all into 22,500 January $23 calls. The investor paid $1.50 for those Jan calls, for total transaction value of almost $3,400,000. Now that’s confidence for you.
Encana (ECA) is scheduled to announce earnings on July 24 for the second quarter results. It has a consensus rating of HOLD, with a price target of $26.00, making this call buy have some good profit potential, if the analysts are right ( are they ever?)
Encana is actually trading down at the moment, down 6 cents to $22.21 on above average volume.
Global X Social Media ETF (SOCL)
We thought this one was very unusual in size and timing. A big player bought 4,000 August $19 puts in the Global X Social Media ETF (SOCL) this morning. They paid 80 cents for those puts.
The SOCL price does seem to have broken down Monday morning, and this large player is expecting even more pain to come. SOCL is trading down 4.25% this morning, to $18.63. This is an interesting one, but a risky one. We generally avoid a copycat trade on sector bets as the investor is less likely to have insider knowledge of a drop in a sector, versus a drop / rise in a specific company.