Thursday, July 25, 2013

ONEOK (OKE) - Stock Pop Reveals Potential Information Leak Ahead of News; How to Make $3.3 million in 17 Days

OKE is trading $51.58, up 20.4% with IV30™ up 17.7%. The LIVEVOL® Pro Summary is below.

ONEOK, Inc., is a diversified energy company. The Company’s segments include ONEOK Partners, Natural Gas Distribution and Energy Services.

This is an order flow note – or more specifically an order flow not that calls upon some highly unusual trading ahead of what has turned to be market moving news. OKE is ripping on news that it will spin off its gas distribution business. So an event / announcement that was likely discussed internally before today.

Let’s start simple. OKE has averaged 1,747 calls traded a day over the last three months. The Stats tab is included below.

OK. Now let’s look at the Options Tab from 7-8-2013, below.

So the stock price closed at $41.42 (at the top) and check out the volume in the Aug 45 calls: 6,346 calls traded on OI of just 142. The following day that OI went to 5,544. I have included the OI chart for just that option, below.

The OI jumped on 7-9-2013, reflecting the volume on 7-8-2013. That trading turned out to be opening call purchases for ~ $0.50 for ~$275,000 “investment.”

And today…

We can see those Aug 45 calls are now worth ~$6.50 turning that $275,000 bet into a $3.58 million position, or ~ $3.3 million gain (1,100%) in seventeen days.

How fortunate.

This is trade analysis, not a recommendation.

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