Monday, October 17th, 2016

Unusual Option Activity Case Study – China Intergrated Energy (CBEH) – China Intergrated Energy (CBEH) is down more than 40% the last two days. Shares are under pressure with reports of the company possibly issued inaccurate financial statements or “FRUAD”. This is a recent theme that we have been seeing in the recent months in a few Chinese companies. Yesterday, in my live trading chat room, I picked up a large block of out of the money block of puts bought in this name. Right when I saw this come across the tape I alerted my members that this activity is unusual and likely that someone that knows the news before the rest is acting on it to make a large profit when the news does come out. Well, a few hours later shares started to see an acceleration to the downside. Well that put buyer from the morning started to see profits of 100%. Today, we are seeing shares continue to ; push lower after a few downgrades happened this morning on worries of the reports that the company reported false financial statements. Put buyers are still coming in for out of the money puts in April, June and September. End result is that in many cases even if you are a stock, futures or an option trader, that following what is going on in the option market pays off. Its almost like having a crystal ball at times.

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