Unusual Options Activity in BABA stock, JMIA and FCX

December 7, 2021

AAPL Unusual Options Activity 090821

Here we are again. Just 1% from the all-time highs.

And the strongest stock on the board has been AAPL.

Here’s an interesting look at a potential side-deal AAPL made with China.

I don’t think it knocks the stock but I think it’s interesting to see how the largest U.S. Companies are beholden to the Chinese government.

UNUSUAL OPTIONS ACTIVITY

1. Does BABA Go Down on a Delist?

2. A Growth Stock Looking For a Bottom

3. Is THIS Miner Heading to New Highs?

Let’s get started...


UNUSUAL OPTIONS ACTIVITY BABA STOCK

Does BABA Go Down on a Delist?

Unusual Options Activity BABA 100421

By this point, most big investors have been spooked by the “delisting” hysteria going on. The market has done a great job of shaking that tree.

At some point, the risk-reward starts tilting in your favor to use options.

Maybe, BABA delists. Maybe not.

And even if they delist, are you sure the stock goes down? Why can’t it go up a lot?

This isn’t checkers. This market is more like 5D chess.

So, you must think through all possibilities.

And I think there’s a possibility BABA trades higher less than 3 days after a delist (if it even happens).

Here’s the chart:

What Does the BABA Stock Chart Say?

BABA Chart - Options Activity 120721

No sugarcoating here… that’s a disaster. Buying the dip has not worked here.

But at some point, there is a floor. I’m only certain that the floor is $0.

The upside is what looks attractive. Unfortunately, this chart has done some serious damage over the last 4 months. So, you can’t just say it’s going to $300 next week.

$110 is now the low.

$140 is resistance.

And then you must look at the $180 level.

The Bears smell blood, so maybe you get another move toward $100. I am not in that camp, but it’s definitely a possibility.

Options Activity in BABA Stock

Unusual Options Activity Scanner BABA 120721

The option flows have died down in BABA over the last few weeks. This would suggest that everyone is getting tired and nursing losses in the name.

The front week is seeing the normal OTM call and put grabs at the $130 and $120 level.

I think there’s opportunity in the further out expirations.

BABA is an international company on multiple exchanges.

The US listed shares are for the large U.S. investors.

With China hosting the Olympics, I don’t think they want to privatize BABA ahead of sending invitations to the rest of the world. This implies that shares would continue to trade around the world.

Ultimately, the world will have to decide on whether they can trust China and their biggest stock. My guess is that China, as a superpower, wants the world invested (somehow, even if not directly using VIEs) in their companies.


Pick the Right Option

UNUSUAL OPTIONS ACTIVITY JMIA STOCK

A Growth Stock Looking For a Bottom

Unusual Options Activity JMIA 120721

JMIA received its membership into the almost-exclusive “$10 Club” yesterday morning. (If you are just joining, I’m on record saying that 90% of these fantasy stocks will reach $10).

Apparently, it didn’t like the wallpaper. The stock is jumping on strong Black Friday sales:

“Based on preliminary numbers, we recorded in 2021 our largest ever Black Friday campaign, with GMV reaching $150 million, up 30% year-over-year, and Orders reaching 4.3 million, up 39% year-over-year… We posted a record of almost 40 million unique visitors to our platforms, an increase of 27% year-over-year, while our campaign video content recorded almost 190 million views on social media.“

Is it ready to shine again?

What Does the JMIA Stock Chart Say?

JMIA Chart - Options Activity 120721

That's a classic “Momentum Mountain.” And once the momentum is gone in a name, it usually takes time to get it back.

The $10 to $17 range needs some work.

The 50 and 200dma are trending straight down.

Over the next few months, these will probably converge somewhere near that $17 level.

Options Activity in JMIA Stock

Unusual Options Activity Scanner JMIA 120721

There’s unusual options activity in JMIA December options. Specifically, someone sold their JMIA December 17th $12 Calls 4,000x and rolled into the JMIA December $13.50 - $15.00 Call Spread 7,000x for $0.56.

Notice that the RR$ on the $15 Calls, the option he sold, is $17.07. This implies that he does not think the stock can rise above that level in the near-term. This coincides well with what we are seeing on the chart.

In line with that thinking, the JMIA January 21st $15 Calls with an RR$ of $18.88 were also sold to close.


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UNUSUAL OPTIONS ACTIVITY FCX STOCK

Is THIS Miner Heading to New Highs?

Unusual Options Activity FCX 110821

China cut the RRR rates this morning to give their economy a boost. That’s the positive spin.

The negative spin is that the real-estate market is imploding over there.

To get the machines to start buying, all they needed to read was “China cut the RRR rates."

Again, China is going to do everything it needs to do to make sure there is no crisis leading up until the Olympics. When the world is watching they will need to show strength. If that means cut 5x, they will cut 5x.

When China pumps money into the system, commodities get a bid.

And they love their copper. Here’s the FCX chart.

What Does the FCX Stock Chart Say?

FCX Chart - Options Activity 120721

FCX stock is doing everything a strong stock should be doing.

It made a monster move last year from $7 to $46 and has been digesting it for the last 7 months.

Support is at the $30 level and has been tested a few times.

The Bulls are looking at the highs and salivating.

The stock is above the 50 and 200dma and the spread between them has narrowed.

The MACD has also come off quite a bit and will look to turn up if FCX can put together a few good days.

The Bears are going to point to a lower high in mid-November that causes a downtrend they will likely lean against.

But the options flow is telling a positive story.

Options Activity in FCX Stock

Unusual Options Activity Scanner FCX 120721

Someone sold the FCX March 18th $32 Puts 4,000x and bought an equal amount of the March 18th $40 Calls for net price of ~$2.15. They also came in to buy 2,000 of the FCX March $43 Calls.

To give you some idea of a Target Stock Price. The RR$ for the $43 Calls is $50.57. I have to stick in $53 (with 80% confidence) at the top to get the blue pointer to land on that strike.

Just something to think about.

And remember, FCX won’t be flying alone. Where FCX goes, most commodity stocks go.

 So, keep an eye on steel and aluminum stocks as well.

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Best,
Felix

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