Unusual Options Activity in ASO stock, MARA and ZNGA

December 9, 2021

Citi and UBS came out saying that China ADR crushing is overdone.

I share the sentiment.

We are getting close to the Olympics.

They can’t have the economy free-falling while people are there watching the games.

So, I think you can expect only positive news out of China.

By the way, Evergrande defaulted today. You aren't hearing much on that front. They will brush all negative news under the rug for now. 

That said, I’d rather play the Chinese names with options.

Here are today's Top 3:

UNUSUAL OPTIONS ACTIVITY

1. How to Play MARA Over the First Quarter

2. Cheap Won’t Matter If No Growth HERE

3. Is an Activist About to Make a Move HERE?

Let’s get started...


UNUSUAL OPTIONS ACTIVITY MARA STOCK

How to Play MARA Over the First Quarter

Unusual Options Activity MARA 110221

Bitcoin has been under some pressure, which puts equal or maybe more pressure on the miners. For bitcoin miner MARA, it didn’t help to get a subpoena by the SEC last month.

What Does the MARA Stock Chart Say?

MARA Chart - Options Activity 120921

After hitting an $83 high, the stock has been cut in half in 4 weeks.

While giving up the 50dma, it did bounce off $36 and held the 200dma.

It looks like the Bears want to give that level another shot. A break of the 200dma likely gets some support at $30 although I would be looking for something closer to $20.

This would take a move lower in Bitcoin toward the low $30s again. If that were to happen, I expect it to occur in the February-March time frame.

The Bulls simply want to use the 50dma as a steppingstone for a move back to those highs.

Personally, I think the near-term risk is leaning slightly to the downside.

Options Activity in MARA Stock

Unusual Options Activity Scanner MARA 120921

There was some unusual options activity in MARA this morning. Someone stepped in to buy the MARA January 21st $85 Calls for $0.81. It looks like a closing transaction.

Seeing this trade, made me look at a trade that might make sense for long holders of the stock.

With risk to the downside, switching from Stock to a Call Spread over the next few months seemed like better use of capital.

The MARA March 18th $45-75 Call Spread for ~$6.10 look interesting.

If Bitcoin rebounds and MARA shoots back toward the highs, this trade offers a maximum 373% returns without the possible losses if things go sour.  Consider it.


Stop Guessing - Mobile

UNUSUAL OPTIONS ACTIVITY ASO STOCK

Cheap Won’t Matter If No Growth HERE

Unusual Options Activity ASO 120921

Academy Sports and Outdoors is a cheap sporting goods stock. Earnings are due out tomorrow. Up until 3 weeks ago, the stock had great momentum.

Wells Fargo is out with a note today prior to the report:

"We are intrigued by the current setup with the shares -6% MTD (vs. SPX +1%), but we note expectations still aren't low (mid-teens buyside bar vs. Street 10.1%). That said, we believe the sporting goods space continues to be on investors' radars for 2022 given current momentum, tailwinds from the consumer's greater adoption of outdoor and active habits during the pandemic, views on structural margin gains, and cash flow generation supporting shareholder returns. Top sporting goods name ASO checks all those boxes, with the added kicker of margin self-help via internal productivity and margin esports allowing a greater cushion to margin normalization into 2022 and beyond."

I’m intrigued as well.

What Does the ASO Stock Chart Say?

ASO Chart - Options Activity 120921

ASO stock is up significantly on the year and currently riding a nice channel.

The last few weeks haven’t been so kind as Omicron threw it for a loop. ASO dropped from the $51 high to $41 before catching a bid.

It briefly broke the 50dma and is desperately trying to hold on to it before the report.

The Bulls are looking for strong growth; however, as Wells Fargo stated, the banks will wait until they see the print to up their numbers. That’s what makes tomorrow’s report so important.

The options have been busy over the last few weeks.

Options Activity in ASO Stock

Unusual Options Activity Scanner ASO 120921

ASO is not your typical high option volume stock. Over the last several weeks there have been large Call buyers in the name. You can see the Open Interest in the $40, $43, and the $45 Calls in the December 17th Expiration.

There is also good open interest in the $43.50 and $45 Calls for tomorrow. The interesting part is the willingness of this buyer to move down in strikes ahead of the number, adding more capital to the options position.

It's worth a look.

New Options Chain - Mobile

UNUSUAL OPTIONS ACTIVITY ZNGA STOCK

Is an Activist About to Make a Move HERE?

Unusual Options Activity ZNGA 120921

While things were looking so good in February, ZNGA would like to forget 2021.

All of the new gaming stocks with next-gen metaverse material took investor’s attention away from ZNGA. Throw in the problems with AAPL’s new privacy stand and ZNGA has been cut in half.

It seems like a century ago when they sold an $862 million 0% convertible bond to the hedge funds with a ~$13 strike.

This is a sad chart.

What Does the ZNGA Stock Chart Say?

ZNGA Chart - Options Activity 120921

The stock continues to make new lows, bounce, break support, and make new lows.

There is likely enormous year-end selling in the name as investors would rather take the “coupon” for their losses.

The glimmer of hope is a MACD divergence between August and December.

Maybe there is something else…

Options Activity in ZNGA Stock

Unusual Options Activity Scanner ZNGA 120921

There’s unusual options activity in ZNGA today. Someone is rolling out their January and March options to May and June.

On November 2nd, there was a buyer of 30,000 ZNGA March 20th $8-$10 Call Spreads.

On November 5th and 6th, there was a buyer of 30,000 January 21st $8-$11 Call spreads.

Today, that buyer is rolling out half of his $8 Call positions. He is getting into 30,000 ZNGA May 20th $8 Calls and 15,000 ZNGA June 17th $8 Calls.

I looked at the holdings in ZNGA and I see that Corvex (activist) has a significant Call position along with stock. When stocks get cut in half and there’s real value, Corvex tends to speak up.

Let’s see if they write management a letter in the early part of next year prior to the earnings report.

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Best,
Felix

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