Unusual Short Term Call Buys: Devon Energy (DVN), Steel Dynamics (STLD)

It’s been a slow start to the Tuesday options trading, with not a lot of unusual, or large, or unusually large call buys today.  The only two notable call buys were seen in Devon Energy Corp (DVN), and in Steel Dynamics Inc (STLD).

First off there’s been a whack of call buying Devon Energy Corp (DVN) this morning.  It was started off with a trader buying just 750 DVN September $72.00 calls, paying 48 cents for the contracts.  But now, by 10:20 am there have a total of 1400 Sept 72 call options traded now.  There have been a wack of calls traded in various strikes for September options.  We don’t really understand what’s going on with this one, so we are steering clear of it.

devon_energy-dvn-logoDevon Energy Corp (DVN) is currently trading at $70.79 up 52 cents on the day. The stock is actually off it’s high of the day since the call buy as it bounced down from $71.57.  DVN has a 52 week high of $80.63, and a low of $57.20 for the year.  It’s traded just under 0.8 Million shares so far today versus it’s average volume traded of 2.5 Million.

Devon Energy Corp (DVN)has seen some analyst action the past week with Raymond James  lowering the price target to $91.00 from $93.00.  Given the large number of calls, I wouldn’t be surprised to see an upgrade from either Morgan Stanley or Deutsche Bank n the very near term. Both firms are due for an update on DVN.

Meanwhile things are getting dynamic in the options of  Steel Dynamics Inc (STLD).  A trader bought 1500 of the STLD September $24.00 calls at the ask of $0.28.  Not a large number of contracts but interesting none the less.  That makes for a transaction value of just $42,000.  But size isnt’ everything, when it comes to unusual or sneaky call buying.

Steel Dynamics Inc (STLD) is currently trading at $23.82 up 15 cents on the day, though well off its earlier high of $24.00 since the call buying happened.  STLD has a 52 week high of $24.57, and a low of $15.80 for the year.  It’s traded 760,000 shares today so far, currently on track for roughly average daily volume, which is 3.13 million shares.

Steel Dynamics Inc (STLD) doesn’t announce until October 14, so this call buy is not based on earnings leak.  It’s more likely an impending analyst upgrade coming soon. In this case we’re guessing Deutsche Bank, or Jefferies who are both due for a nice upgrade and price target raise.

We don’t like the short term nature of either of these so we’re inclined to sit these two out.