Unusual Options Activity in CGC, LVS and CAT

September 14, 2021

China Warship

News is just opinions of facts. 

That's why I like to hear the positive and the negative news.

Listening to CNBC all day long and you want to buy every stock out there.

Read Zerohedge for too long and you’ll be buying shares in underground bunkers in some undisclosed location.

Somewhere in the middle of all the positive and negative is the truth.

I try to pull out the facts and make up my own mind.

The question I’ve asked myself for quite some time is… Are we already at war with China?

Some people might say it's over and we lost. Or we're in the last stage and any actual military action would just mark the end of the war.

I am simply trying to make sense of it all.

The U.S. evacuates Afghanistan in a hurry. Before the door is closed, China spends no time entering Afghanistan. 

A week or so later, the U.S. shifts there attention and is pushing the limits in the South China Seas.

And today, I’m reading China sends warships close to Alaska.

My question is: Where are we going with all of this?!?!


1. Breaking News: China Wants Total Control

2. There’s Value in CAT at THIS Level

3. Is This Cannabis Name Ready to Explode?

Let’s get started...


Breaking News: China Wants Total Control

LVS Unusual Options Activity 091421

It shouldn’t be surprising to see news this morning that China is clamping down on the Casinos with greater supervision and more control. At this point it should be clear, they want full control… of everything.

“Macau wants government representatives to supervise casino operators and plans to increase local ownership in gaming companies, signalling tighter control over the world’s largest gambling hub amid Beijing’s efforts to clamp down on money laundering and currency outflows.”

I thought it would be good to show you a 10-year chart to get a sense of where we are.

What Does the LVS Stock Chart Say?

LVS Chart 091421

The pandemic has reset the stock back over a decade.

Part of the problem is that Las Vegas is no longer in Las Vegas. It’s predominantly in the Far East, mainly in Macau. And the Chinese are not letting anyone into their country.

No open borders = no profits.  

On this move down, options activity is significant as investors try to figure out what to do here.

LVS Active Option Contract to Watch

Unusual Options Activity LVS 091421

A few weeks ago, we saw massive buying in LVS October Call options right before the move from $36.50 to $45.50.

While some of those plays scored nicely, they are giving back a good amount today.

That said, they are swinging again and rolling the October options ($45, 46, & 47 Calls) down to a lower strike ( $42 Calls).

They are also buying the LVS January $40 Calls. More than 20,000 Calls have been bought this morning.

Recall, I don’t think this stock is investable until China opens the border. 

That said, options offer interesting opportunities to play the swings.


There’s Value in CAT at THIS Level

CAT Unusual Options Activity 091421

While analysts generally like CAT, the story here is mainly the chart…

What Does the CAT Stock Chart Say?

CAT Chart 091421

After a huge run from $85 to $245, the stock has pulled back here. 

$200 is clearly a big level over the last few months.

So, it was interesting to see someone come in and sell puts this morning.

CAT Active Option Contract to Watch

Unusual Options Activity CAT 091421

The CAT December 17th $180 Puts were sold 10,000x at ~$3.65.

In general, the institutions that do this are very long-term in nature. They are indicating that they find value in CAT at $180 and would likely be a buyer as the stock declined into that strike.

Keep in mind, they are getting long 1,000,000 shares at $180 through the options. This likely means that they would be willing to buy 10x that if the stock got there.


Is This Cannabis Name Ready to Explode?

CGC Unusual Options Activity 091421

Canopy made an announcement today launching “Whisl,” the company’s first-ever CBD vape:

“With the launch of whisl, we’re excited to provide consumers with a modern and effective way to harness the power of CBD and control how they feel from morning to night. At Canopy we call this concept “mood management,” and innovative products like whisl are bringing this concept to life through a custom pod system.”

Sounds like a buy.

Not so sure about the stock.

What Does the CGC Stock Chart Say?

CGC Chart 091421

After a huge run in January, CGC is down almost 75% from those highs.

$13 looks like a 2-year support level on the stock.

But maybe there’s room for a pop…

CGC Active Option Contract to Watch

Unusual Options Activity CGC 091421

Unusual Options Activity in CGC showed up today.

Call buyers were in the CGC December 17th $17.50 Calls. 13k contracts have traded so far. That RR$ is pointing to $21.83, which would indicate a target stock price north of $22.

Notice that $22.00 was also a decent pivot level for CGC. The stock broke that in July before the recent collapse.

Can it get there again?

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