Friday, March 5, 2010

VeriSign (VRSN) Unusual Activity

Take a look at June options.  Here is the tally:


Puts: 
- June $25: 14,100 traded, almost all sold on the bid at $0.90 and $0.95 in huge blocks (1356, 4636, 2595, 1000, 2000)
- June $24: 2,490 traded, 100% sold on the bid at $0.65 (largest block 1013)
- June $23: 2,000 traded, 100% sold on the bid at $0.40 (several small lots under 1000)


Calls:
- June $27: 14,167 traded, almost all sold on the bid at $1.25 in huge blocks (1356, 4636, 2595, 1000, 2000)
- June $27: 3,969 traded, 100% sold on the bid at $0.60 and $0.55 (several small lots under 1000)


This is a continuation I am seeing across many names implying this market is going nowhere any time soon.  The IV is pushing down slightly in VRSN and the trader is most likely betting that IV will go to low 20's from currently in upper 20s in June.  


If you have patience, I suggest the following iron condor:


- Buy to open June $23 puts
- Sell to open June $24 puts
- But to open June $29 calls
- Sell to open June $28 calls


The trade provides 100% return as long as the stock remains between $24 and $28 by June expiration (see the attached daily chart).  Following the unusual activity, I like the odds.  


Good luck!