Stocks were on fire in the month of June, the S&P 500 closed up 6.9%, its best June performance since 1955.
As for me, it was business as usual on Friday:
“out BYND calls 5 min hold for +650” ~ Jason H.
“IMGN, my first win, 221.90 $ lol” ~ Hoda K.
“+4k on VEEV calls yesterday, back in today, found a base at 154 and I believe heading back to the highs” ~ Rick V.
“sold PHUN. 2.60 to 3.81 2k shares. nice little win for today. Thank you to who brought that up this morning” ~ Todd Y
Thursday wasn’t too bad either…
(Want to know how FDA Insider Alerts can give you the edge you need to profit in the stock market? I explain it all in this video, watch it now)
And of course, who could forget Tuesday…
(I don’t swing for the fences but sometimes I knock them out of the park. Not sure how FDA Insider Alerts can help take your trading to the next level? Then watch this now)
However, I’m not here to talk to you today about the usual…
I’m here to discuss the unusual…
As in… my weekly unusual options activity report.
Every options trade that is made must be reported to the Options Price Reporting Authority… which means hedge funds, institutional traders, and other whales, can’t hide their trades.
Now, that doesn’t mean we know who is placing these trades and who is on the other side… we just know they are out there, and there is special trading scanners that detect large option block trades…
Or as I like to call them… “smart money” options trades.
Now, I don’t claim to be an expert, but I have managed to find some big winners since running my scans, like a 455% options winner in SLCA calls:
My scan is so specific that out of the hundreds and thousands of options orders that are reported… less than a handful are able to qualify after my rigorous scanning process…
And today is no different. After running the numbers, I only saw one stock with unusual options activity worth noting.
The Company: EVERTEC, Inc. (EVTC)
Based out of San Juan, Puerto Rico, this electronic transaction company has a presence in 26 countries. Its services include merchant acquisition, payment processing, and business solutions.
It owns and operates the largest Debit Network in the Caribbean. And is widely considered among the leading payment processing companies in Latin America. On average it processes 2 billion transactions per year.
On Friday, EVTC saw 18 times usual options activity, with the majority of action coming on the call side.
So let me put that into context. On a normal day, there are about 34 contracts that trade on EVTC. However, there were over 1K contracts traded on Friday, and most of them were call buyers.
My options scanner picked up on the flurry of activity in August $35 calls.
For example, one order that came across the tape saw a trader come in and buy 498 August $35 calls at $1.05, when the stock was trading at $32.76.
At the time of the trade, the bid/ask spread was $0.50 by $1.05!
In other words… the trader “paid” the offer.
A savvy trader would try to work the order, meaning, they would try to buy somewhere between the bid and ask price to get the best price possible.
Maybe try putting the bid in for $0.80 or $0.90 to see if it executes at a better price… because every penny counts here… saving $0.15 on 498 contracts will keep $7,470 in your pockets.
So you can see why this trade is so unusual… its a real aggressive trade in a stock no one really trades. For example, the stock only trades about 386K shares per day.
The options purchased were OTM, which means these are more or less lottery ticket bets.
Here’s a look at the daily chart in EVTC.
The stock gapped up and broke above its previous resistance level just above $31 (the blue line).
The reason for this break above the resistance?
Evertec and Banco Santander announced they’re entering into an agreement to open a Chilean merchant acquiring market.
That’s an indication that there’s demand for the stock. Typically, when stocks break above resistance levels… they tend to run higher.
That said, with the stock already at 52-week highs, the call buyer believes there is further upside from here.
Will they be right? Is there a catalyst on the way? We’ll just have to wait and see.
The company does report earnings in July, and the August options cover the earnings, so it could just be a play on that.
That’s the thing, you never know what you get with unusual options activity.