It’s a relatively slow day in unusual options activity today, so we thought we’d update you on a couple of of previous big call option trades in Ensco PLC (ESV) and in Newfield Exploration (NFX).
The first one was in Newfield Exploration (NFX), which we wrote about on June 19. On the June 19 NFX attracted a crap load of call buying of 5000 January $55 calls at 50 cents, 5,000 of the Jan $45 calls at $3.00, AND 2,400 of the January $42 calls at $4.20. That makes for a total investment of just over $2,750,000. Of course we are assuming that it was one buyer doing this all at the same time.
Newfield Exploration is now up $2.00 since June 19, now trading at $44.69 this afternoon. And those options are now trading at the following:
Jan $55 at 70 cents for a profit of 20 cents, or 40%
Jan $45 at $3.70 for a profit of 70 cents, or 23%
Jan $42 at $5.30 for a profit of $1.10, or 26%
Assuming the trader is still holding these options, they are sitting on paper profit of $714,000 for a nice return of 26 % in just over one month. Of course, we will assume they are holding on for much bigger gains to come.
The second trade, we wrote about just last week, on July 17 about call buying in Ensco PLC (ESV). One trader bought 8,471 August $60.00 calls at a price of 15 cents, a rather large bet for a way out of the money option that expires in a month. The stock was trading at $54.09 that day.
Now, a week later, Ensco (ESV) is trading at just $54.03, up 3 cents on the day. If you think this trader knows something we don’t and you want to jump on his bandwagon, the August $60 calls can be bought now for just 10 cents. Clearly the trader knows more than most.
Ensco PLC announces earnings on July 31, so we are assuming this trader knows the numbers, and they must be spectacular.
We haven’t jumped in on this yet, but will be keeping a very close eye on the price and may jump in before earnings depending on how the market holds up between now and July 31.