Fundamentals Don’t Matter in the Short Term… THIS does!

September 1, 2021

Unusual Options Activity  090121 - Fugazi

Click image to watch the SKLZ Bulls vs Bear video

Some people hate technical analysis.

They think it’s fugazi … fugayzi … it’s fairy dust…

Technical Analysis does one thing very well.

It helps you visualize supply and demand.

Remember, price is the only true measure of what a stock is worth right now.

That’s it.

The stock might be “undervalued” or “overvalued” in the long-term, but right now…

The value IS what you see on the screen.

And that price is simply a function of supply and demand of shares.

If you trade options, you must understand that fundamentals are a long-term concept.

Options are (generally) a short-term game.

When you focus UOA, make sure you take clues from the charts! 

When you think about these 3 trades, I want you to think about Supply & Demand!

Here goes…

UNUSUAL OPTIONS ACTIVITY

1. Fundamentals Don’t Matter in Short Term… THIS does!

2. What Will Save This Company?

3. Was THIS Huge Price Decline Warranted?

Let’s get started...


UNUSUAL OPTIONS ACTIVITY LCID

Fundamentals Don’t Matter in Short Term… THIS does!

Unusual Options Activity LCID 090121

Lucid Motors (LCID) came from the CCIV SPAC.

They’re a high-end EV car manufacturer for the rich and famous.

You can watch Bull vs Bear video to get a better picture of the stock.

One of the bear arguments has always been the supply of stock that will eventually come for sale as the earlier investors try to take some profits. 

The lockup period for a $2.5Bn PIPE deal expires today, putting pressure on the stock

LCID Chart 090121

Remember that big drop in February? It was this PIPE that caused that disaster.

And it just so happens that these PIPE buyers paid $15 for the shares.

We hit $16 today, breaking the previous $17.25 low in May. 

LCID Unusual Options Activity 090121

The Call buying this morning strong. Buying the dip is in full force across September and October.  

The LCID September $20 Calls are active and saw more then 10k bought near the open.

Michael Klein and his team still have Billions of profits left in this name that still needs to be monetized.

Remember, fundamentals count in the long-term.

In the near-term, the market is a supply-demand pricing mechanism.


UNUSUAL OPTIONS ACTIVITY SKLZ

What Will Save This Company?

Unusual Options Activity SKLZ 090121

Click image to watch the SKLZ Bulls vs Bear video

Skillz (SKLZ) is seeing renewed interest this week after hitting $10 (our lucky number).

There’s been very little news flow for the sudden interest. Maybe it’s hopes for the NFL partnership to start panning out or an imminent India launch?

Look, SKLZ has been pounded by the shorts for months. 

But when you talk about a “100-year vision” for your company on national television and your price-to-sales ratio is through the roof, you’ll attract the shorts to pound your stock!

The shorts will force you to show continuous high growth.

And this is what happens to a high price-to-sales stock when it stops growing…

SKLZ Chart 090121

Ugly chart to say the least. But there's a small lift off from this $10 level.

Is this the beginning of the comeback?

The Street wants sustained high growth. 

And the shorts want SKLZ to prove it!

SKLZ Unusual Options Activity 090121

Call buyers are swarming SKLZ today. Unusual Options Activity in SKLZ has popped up in the September weekly options. 

More than 100k contracts are trading in this week’s options alone. This is crazy activity and it’s always difficult to handicap “crazy.”

Next stop $17 or $8?

>>> If you’re new to SKLZ, I would take a look at this Bulls vs Bears video to catch up.


UNUSUAL OPTIONS ACTIVITY ABBV

Was THIS Huge Price Decline Warranted?

Unusual Options Activity ABBV 090121

Rinvoq is a derivative of ABBV’s blockbuster drug Humira.  As all blockbuster drugs do, Humira will lose patent protection in the coming years. ABBV has created 2 derivatives of Humira, Rinvoq and Skyrizi, to keep the money flowing in.

Here is the CEO’s statement in their conference call earlier this year:

“With RINVOQ and SKYRIZI expected to contribute more than $15 billion in risk-adjusted sales by 2025 and our expectations for continued robust growth across hem/onc, neuroscience, and aesthetics, we have a high degree of confidence that we will be able to successfully absorb the Humira LOE impact in 2023, support an immediate return to total sales growth in 2024 and produce compelling high single-digit compounded annual total sales growth in 2025 through the remainder of the decade with the diversified portfolio and pipeline that we have today.”

So, Rinvoq is something ABBV is leaning on for the future. Today, the FDA came out with this on a competitor drug produced by PFE:

“Based on a completed U.S. Food and Drug Administration (FDA) review of a large randomized safety clinical trial, we have concluded there is an increased risk of serious heart-related events such as heart attack or stroke, cancer, blood clots, and death with the arthritis and ulcerative colitis medicines Xeljanz and Xeljanz XR (tofacitinib).”

They asked for updated warnings on PFE’s Xeljanz and ABBV went up at first.

But if you read the whole FDA warning they also include Rinvoq, as it has a similar drug mechanism. 

Connect the dots and by 11 am this happens:

ABBV Chart 090121

ABBV stock was pummeled this morning, dropping from $121 to $106 in a hurry.

High options volume in Put options hit the tape just in time...

ABBV Unusual Options Activity 090121

Buyers came in to buy 3,000 ABBV September 3rd $115 Puts for about $0.42 as the stock started its decline. They went to $9.00 in minutes.

Since, then Call buyers have popped up in October and January, indicating that this might have been an overreaction.

We’ll see.

Now go make some money!

Best,
Felix

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