There’s been a couple of very unusual option buys run through this afternoon, including SuperValu Inc. (SVU), and Time Warner (TWX).
The first trade is in SUPERVALU INC. (SVU), where an investor placed a big bet, buying 5,000 October $9 calls for 43 cents a piece. That makes the value of this bet $215,000. Of course it’s likely just a coincidence, but Supervalu Inc. is scheduled to report earnings between July 14th and 17th, 2014. Naturally, no one would be trading on insider information, as that would be illegal. So we have to assume this is just one risk taking investor hoping for the best.
But since we like his attitude, we’re going to pick up a few of these SVU October $9 calls in case this investor gets “lucky”.
SVU is currently trading at $8.29, up 4 cents on the day. It’s currently got a consensus rating of HOLD, and a price target of just $7.84. Current quarter estimates are for 17 cents per share profit. Based on those shabby ratings, maybe this large investor is “guessing” that an analyst upgrade and price target raise is about to be announced?
Time Waner Inc. (TWX) is another stock that saw some unusual options activity this afternoon. Though this stock is well know for frequent “unusual” options activity. Today a trader bought 2,194 of the October $80 calls for 80 cents per. The stock is up big today, and spiked higher after the call buying spree. The stock is trading at $72.23 up $1.53 on the day, and hit a 52 week high of $73.07 today.
TWX reports earnings on August 6, 2014, with a consensus estimate of 84 cents per share in profit. Twenty eight analysts rate TWX OVERWEIGHT, with a price target of $76.49. So based on this largish call buy today, we could see an price target increase by a major firm in the next few days. Or, we wait for great earnings on August 6. Either way, we’re in like Flynn, because Flynn clearly knows something we don’t.