Occidental Petroleum Corporation (OXY) conducts its operations through various subsidiaries and affiliates. The Company operates in three segments: oil and gas segment; chemical segment, and midstream, marketing and other segment. OXY is currently trading around $95.83 in a 52 week range of $85.90 – 105.64. The company’s stock has been underperforming the market this year with shares increasing .86% year to date. Today, a trader bought 2,967 OXY Oct14 100 Calls at $0.70, and, 2,964 OXY Oct14 100 Calls at $0.50. This order involves this trader laying out over $350,000 in total premium. OXY traded 2.2x the average daily option volume today, and these calls are fairly far out-of-the money and are front-month contracts with very little time value left, which might indicate this trader is most likely very bullish on the name. Oil stocks have been selling off in the recent past, yet crude oil rallied today from its deepest sell off since 2012, helped by a combination of encouraging Chinese factory data and sliding crude inventories in the United States.
Unusual Option Activity:
We define unusual option activity as large block trades that represent a large percentage of daily option volume. The block trade is considered “unusual” if the option volume is above the average daily volume over the past 22 days. At KeeneOnTheMarket.com we scan and analyze order flow from all of the major options exchanges in order to identify any unusual option activity.
Analyzing unusual order flow gives traders a window into what the positions that large institutional players have. The majority of unusual option activity can be traced back to hedge funds, mutual funds, and other large institutions. Knowing where these institutions are placing their bets can be hugely advantageous for any trader. These institutions have informational and technological advantages that the average trader doesn’t have, and the amount of time and analysis that goes into every one of their trades is substantial. We offer this service through our 7 hour daily LIVE trading room http://bit.ly/1usQnKR or through the only Unique Unusual Options Activity Scanner: http://bit.ly/1sCSaws
Order flow can however at times be deceiving. One might logically thing that a large block buyer of calls is bullish on the underlying. This is not always the case. Remember that a large number of participants in the equity options market are hedgers. Long calls are a hedge against short stock, and long puts are a hedge against long stock. With this in mind we have developed a 7 step trading plan that helps filter out unusual option activity that will not provide actionable trade setups. It is by using this plan that we are able to identify the most significant unusual options activity trades every day.
The Trades:
Buying the 2,964 OXY Oct14 100 Calls for $0.50
Buying the 2,967 OXY Oct14 100 Calls for $0.70
Risk: $50 for every 1 lot, $70 for every 1 lot
Greeks of these Trades:
Delta: Long
Gamma: Long
Theta: Short
Vega: Long
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