Unusual Options Activity in FUBO, DIS, SPCE

August 31, 2021

A Quick But IMPORTANT Lesson For You...


Sitting at the Hedge Fund next to two incredible portfolio managers was an incredible experience. To be a fly on the wall and hear them think through ideas every day helped me develop the instinct to try to connect the dots.

Company A takes out Company B. What does that mean for competitor Company C?

Even better, what does that mean for company D that may want to get into the mix? 

You saw this play out live over the last 2 months with AAPL and Goldman teaming up in the “Buy Now Pay Later” trend. Then SQ buying AfterPay. And yesterday, AMZN partnering with AFRM.

It was right in front of us. 

So, when you see news, or you find some UOA…

Practice connecting the dots.

Here are today’s 3 Interesting Trades to consider …

UNUSUAL OPTIONS ACTIVITY

1. The Bigger the Dream… The Wider the Range

2. THIS Stock Has a Lot of Ways to Win!

3. If That’s Worth $50 Billion … How Much am I worth?

Let’s get started...


UNUSUAL OPTIONS ACTIVITY SPCE

The Bigger the Dream… The Wider the Range

Virgin Galactic (SPCE) is trading well today on the back of Jefferies starting coverage with a Buy rating:

“The business model is simple; more customers + more spaceships to meet demand drives topline growth… (While the $445,000 Price Per Person is) limiting those that can actually afford the experience, (250,000 people have) the interest and the means to travel to space… Coupled with rising wealth, this implies a potential ~$120 billion market for commercial space over time, which we believe is largely untapped.”

$445,000 to take an airplane and then a booster 1 mile into “space” for 3 minutes.

How long until Disney creates the EXACT same experience at Disney World for $100 extra? 

The ride would take you to the “moon”, land, and then allow you to get out and jump around. 

I get it. It's not the same. But, there's probably better things people can do with half a million dollars. 

Ok, back to SPCE...

The stock is all over the place as it should be. I mean, how do you price a dream?

Apparently like this chart…

Granted, we’re in the lower third of this risk-reward framework. But, before these two mountains there were big hurdles to pass to make the dream a reality. 

Today, we’re closer to reality, however, the next hurdle is a bit tougher - Profits.

That didn’t stop the Call buying this morning…

The front-week and monthly action is significant. Buyers came in for this week’s $27 Calls on the open.  You can see that there's not much Open Interest.

Next stop Mars?

Wake me up at $19.


UNUSUAL OPTIONS ACTIVITY DIS

THIS Stock Has a Lot of Ways to Win!

DIS is one of those names that has staying power. The stock is up over the last year while their main source of revenue, theme parks, has been closed.

Deutsche Bank had a research call on Friday:

“We believe the stock is at a tricky point here, where the valuation is high, but at the same time [direct-to-consumer] should see renewed tailwinds and the Parks outlook should continue to recover, notwithstanding resurgent COVID cases.”

Great stocks seem to avoid ever getting too cheap.

And the chart looks pretty good…

After a huge move, DIS is consolidating up here and showing a little curvature action there in the last few months.  

If the stock goes higher, it appears like $200 is the right target for now. A break through that with volume and we have a whole new ballgame.

Unusual Options Activity in DIS seems to be indicating a similar prognosis…

Besides the call buying going on in the front weeks, the Octobers are also seeing some buying. Using the RR$ as a guide, I threw in $200 up top and the pointer lander right on today’s action.

Earnings aren’t until November, but one near-term catalyst for the stock could be a $3Bn deal with ESPN that’s been floating around.


UNUSUAL OPTIONS ACTIVITY FUBO

If That’s Worth $50 Billion … How Much am I worth?

FUBO Bulls vs Bears Thumbnail

And speaking of this ESPN deal, don’t sleep on FUBO anymore.

I was quite bearish on FUBO during its February climb and eventual fall. To me, FUBO is similar to Netflix during its days. The big difference is its focus on live sports. 

The live sports angle makes it much more difficult to survive and thrive.  That’s why I wanted to see them create a new ESPN!

That would make FUBO stock exciting. 

ESPN is worth north of $50Bn.

FUBO’s market cap is just $4Bn.

So, when FUBO made this announcement in early May to boost their original programming, I started paying attention. And then I changed my tune when the stock turned.

Here’s the chart…

The stock is trading well this week and has recaptured the 50 dma.  

However, FUBO is clearly on the right side of the “Momentum Mountain” here, which means we need to be cautious not to get too excited.

As you can see, there’s a lot of stock supply from $30 to $60.

That’s not stopping the FUBO Call Buyers today.

Front-month Call buying out of the gate is seeing the highest options volume for the name and is targeting a quick move higher toward $30-31.

>>> For the Bull & Bear Arguments on FUBO

Now go make some money!

Best,
Felix

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