Hey Traders,
Unusual volume trades are nearly always worth paying attention to.
Even when I think the trader is wrong … such as a massive block of 21-strike VIX puts I saw cross the tape on Wednesday …
Big Money usually isn’t acting foolishly …
They don’t gamble hundreds of thousands or millions on a trade “just because.”
And when Big Money makes a massive move in a stock with rather low liquidity …
That’s also something worth noting.
So when Big Money took aim at this name, I had to take a closer look …
Clarus Corporation (Ticker: CLAR) is a manufacturer of outdoors sports equipment, including climbing gear brand Black Diamond, and not one but two bullet manufacturing companies: Barnes and Sierra.
The shares haven’t exactly enjoyed tailwinds over the past few months … in fact, quite the opposite.
After an extended slide lower, the shares were hit with a bout of especially volatile trading in mid-May through early June, following a mixed earnings report that saw CLAR report record revenue of $113 million (better than expected by more than $2.8 million!) but miss on non-GAAP earnings by $0.02.
The company reported being hit by supply chain shortages, but the better-than-expected sales in their ammunition segments and vehicle rack segments helped make up for lacking inventory in other areas.
But … I’m not here to talk to you about belays or bullets.
We’re here to talk Big Money!
And this Big Money trade definitely caught my attention on Wednesday …
On Wednesday, as CLAR shares eked out a less-than-0.1% win to close at $18.68, this trader opened 15,000 December-dated 20/30-strike call spreads, paying $3.40 for the lower strike, and selling the higher strike for $0.81.
All in all, this outlay of $3,885,000 sends a rather powerful message about Big Money’s bullish belief in CLAR …
And when you take it in context of CLAR’s usual volume, it sends an even stronger signal.
Currently, CLAR’s total open interest in the pits is 153,492 contracts … more than 652% above average.
And … get this … of the 153,492 contracts open … only 5,797 of them are puts, meaning calls outnumber puts nearly 26-to-1!
Interestingly, the heavy call skew in CLAR’s pits isn’t actually too unusual …
It’s just on a much, much larger scale than usual.
With an average daily volume of just 689, a block of 15,000 call spreads definitely is worth paying attention to.
And while this trade is certainly interesting on its own, check out the open interest for nearby strikes in December …
CLAR’s December term holds by far the most open interest of any other.
So what does Big Money see?
Will CLAR deliver an outstanding earnings report before EOY?
Or are they simply betting on a slow creep higher before December expiration?
Either way, this trade is worth keeping an eye on …
(But with its current low liquidity, I might think twice before sinking any significant amount of money into a CLAR trade!)
Mark