Volatility Spikes in ZAYO as a Trader Places a Big 7 Day Bet

I trade Unusual Options Activity (abnormal volume in calls or puts) because often, these trades result in a stock making a major move.

Today we saw a trader buy over 3,500 ZAYO December $27.50 Calls for $0.35. This order cost almost $100,000. Each contract entitles the option buyer/owner to buy 100 shares of the underlying stock upon expiration. And ZAYO has an ADV (Average Daily Volume) of only 4,870,000 shares.

I like this trade because there have been rumors of takeout of ZAYO.

Though we never know if a trader is buying Calls for Speculation or a hedge against a short stock position, I do think this setup is a good reward to risk setup.

I could not get filled in the December $27.50 Calls, but I was able to buy January $27.50 Calls and got filled at $1.10.

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Andrew Keene

About the Author: Andrew Keene

Andrew Keene is President & CEO of AlphaShark Trading, which he originally founded as KeeneOnTheMarket.com in 2011. Andrew currently actively trades futures, equity options currency pairs, and commodities. He is a regular guest market commentator on such networks as Bloomberg TV, CNBC, and Fox Business. Keene's first love will always be trading, but he is arguably even more well known for building a trading room. Andrew is especially proud of having taught his personal strategies to over 50,000 students over the past 4 years. He is a self-made millionaire from trading and wants to continue to teach and help others.