March 1, 2013
TD Ameritrade (AMTD)
ACTIONS: Buy the AMTD August 22 Calls for $0.40 or less
Dear Fellow Big Money Options Traders,
Yesterday, an institutional options trader bought 37,000 TD Ameritrade (AMTD) Aug 23 calls in a single block. This was nearly double the call open interest in all strikes and expirations for AMTD. On the day, a total of 42,000 Aug 23 calls traded, 97% on the ask.
AMTD management is presenting at the Raymond James 34th Annual Institutional Investors Conference on March 5. The company beat earnings and revenue estimates to the upside when it last reported on January 22. The next earnings release is expected to be April 16, before market open.
The real catalyst might be AMTD is holding nearly $100 billion of cash. If interest rates were to rise, interest income to AMTD would jump substantially and would fuel significant earnings outperformance.
Given the size of the options trade and the interest rate sensitivity of AMTD, we recommend buying the AMTD Aug 22 calls for $0.40 or less.
Have a good week trading.
Nick Atkeson and Andrew Houghton
Big Money Options