As the market falls off again this morning, we bring you a couple unusual options trades. One from late afternoon yesterday in JDS Uniphase Corp (JDSU), and one just now in Verso Paper Corp (VRS).
JDS Uniphase (JDSU) Big Bullish Call Buy
First, the bullish. Yesterday afternoon a trader bought 4,100 September $13 calls, almost all at the ask of 63 cents. This was a large opening trade, and a rather unusual one. With today’s overall weakness, it may be a good time to place a copycat trade as you can now get the same calls the “smart money” investor got at 63 cents for just 55 cents right now.
JDSU reports earnings August 11, 2014, and while a leak of their numbers is a possibility, we think this big call buyer is expecting other catalysts coming down the wire sooner than earnings. Perhaps an analyst upgrade and price target raise is in the works. JDSU does already have an overweight rating and a price target of $14.82 among 19 analysts that cover the company.
Big Bearish Play in Verso Paper Corp (VRS)
Verso Paper (VRS) just saw a big put buy in it’s August $2.50 contracts. A trader bought 6,000 of the August $2.50 puts for 40 cents. Verso is a producer of paper products, and has seen its share of financial troubles over the past couple of years. It seems this trader knows things are about to get a lot worse for the company.
Verso Paper (VRS) is trading down almost 7% today already, down 19 cents to $2.62 in early trading today. It has a 52 week low 52 cents, so there’s plenty of room for freefall in this stock. VRS did hit a high of $5.55 this year when it was thought the company had successfully rectified it’s financial issues via a restructuring that seems to have now failed.
We’ll have to keep an eye on both JDSU and VRS for any developments in the near future.