Unusual Option Opportunity In Brookdale Senior Living

According to Options and Volatility, shares of Brookdale Senior Living, Inc. BKD saw unusually high options activity on Thursday. Notably, the August 35 calls traded 2,326 contracts versus only 697 open interest.

In addition to the increased volume, the implied volatility on the August 35 calls rose dramatically, moving from 31.95 on Wednesday's close to 36.51 on the close Thursday, an increase of over 14 percent. While shares of BKD dropped 0.31 on Thursday, the August 35 calls actually rose 0.10 due to the large option volume. Conversely, the October 35 calls, which saw only 28 contracts trade, dropped by 0.07. This set up a call calendar spread opportunity, buying the BKD October 35 calls and selling the same amount of August 35 calls for 0.43.

Options and Volatility noted this captures a 35.93 percent edge and positions slightly bullishly along with the large call buyer. The August 35 calls have a delta of 38, while the October 35 calls have a 41 delta, making the spread delta 0.03.

Shares closed at $33.34, down $0.31.

Disclosure: The author had a no position in BKD at the time of publishing.