Trader Buys Over 10,000 KWEB Calls into the Fed Announcement

I trade Unusual Options Activity (abnormal volume in calls or puts) because more often than not, these trades result in a stock making a major move.

Today we saw a trader buy over 10,000 KWEB December 41 Calls for $.75 debit.  This order cost over a $750,000.  Each contract entitles the option buyer/owner to buy 100 shares of the underlying stock upon expiration.  KWEB has an ADV (Average Daily Volume) of only 2,280,000 shares.  This trade has a huge risk and huge reward due to the fact that these Calls are Out of the Money and only have 3 days until expiration.  If the stock does not move above $41.75 or 3%, this trader will lose money.

Due to this risk/reward scenario, I did buy these Calls for $.75 but I took a very small position.  I will risk the calls expiring worthless and I have a profit target at $1.40 and $2.00.

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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.