Thursday, December 10, 2009

Gildan Activewear (GIL) - Anatomy of a Winning Trade

GIL is a $2.4B manufacturer and marketer of activewear. The LIVEVOLTM Pro Summary is below.

The company averages 470 option contracts a day - in the first 1.5 hours of trading over 5,400 contracts have traded. The Company Tab snap is below (click to enlarge).

The largest trades of the day have been purchases of the March 15 puts. The largest trades of the day are posted below - green indicates trades on the offer (cust buying). You can click the image to enlarge.

The snapshot of the Options Tab (below) shows that the volume today is very close to the open interest. Click the image below to enlarge it.

By clicking the strike we can see the Level II pop up. This pop, amongst other things, displays the OI chart. There is a clear increase in OI in one day in these puts on 10/29 (implying the opening trades were 10/28). The Level II pop up is below (click to enlarge).

By going to the Time & Sales Tab to that date and the March 15 puts, we can see that the opening trades were sales (red implies a trade on the bid - cust selling). Note also that the 1.30 trade is a sale on a 0.30 cent wide market (1.30 x 1.60). When I see size trades on the NBBO of wide markets it makes me feel even more strongly that the order flow has information. i.e. someone believes this is a money making bet so much that they do not tip their hand with a negotiated price; they just hit/take what the NBBO bids/offers.

So what's what? It looks to me that someone sold 3500 Mar 15 puts @ 1.30. Today they are buying them back for 0.35. That $0.95 x 3500 x 100 = $332,500 gain in 6 weeks. Nice trade. Remember this symbol - if another large opening trade goes up on the bid or offer of a wide NBBO, maybe it's worth investigating.

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