Unusual Options Activity in BAC, DKNG stock and SBUX

November 23, 2021

Unusual Options Activity Happy Thanksgiving 112321

We had a great webinar last night.

I hope that everyone who attended learned a lot.

If there are any questions, please don’t hesitate to ask. 

My thoughts on the market…

It’s trading heavy.

But it’s un-American to crash it over the Thanksgiving Week.

The next Newsletter will be on Monday.

I wish you and your families a Happy Thanksgiving.

UNUSUAL OPTIONS ACTIVITY

1. The Buyers Have Stepped Up HERE

2. SBUX Looking For “Smarter” Growth

3. Where the Buyers At???

Find your own ideas with the Unusual Options Activity Scanner

Let’s get started...


UNUSUAL OPTIONS ACTIVITY BAC STOCK

The Buyers Have Stepped Up HERE

Unusual Options Activity BAC 112321

After a 5-10% drop from the financials, the big banks made a quick u-turn on Biden’s decision to keep Fed Chairman Powell in the driver’s seat.

CFRA research upgraded BAC today:

“We raise our target $6 to $51, a forward P/E of 14.6x our 2022 earnings estimate, above the 12.8x historic average, on our view that BAC benefits from higher rates and higher loan volumes in a strong 2022 U.S. economy.”

BAC is doing what strong stocks do.

What Does the BAC Stock Chart Say?

BAC Chart - Options Activity 112321

The bounce right off the 50dma says a lot. Maybe most importantly, it says the big institutions are buying the banks.

The Bulls must like the V-shaped recovery this week. It has them looking for new highs into year-end. They want nothing more than a steepening yield curve to really get the banks moving.

I think the Bears better play defense here. This week’s action tells them that the institutions aren’t going anywhere just yet.

Options Activity in BAC Stock

Unusual Options Activity Scanner BAC 112321

The BAC option flows are leaning 3 to 1 Calls to Puts. There’s Call buying throughout the December expirations particularly in this week’s $47 to $48.50 Calls.

I’d rather focus on the January options that get earnings on the final week of expiration. If you look there, someone is buying the BAC January $47 Calls for $2.15, implying a Target Stock Price of $52-$53.

The financial industry has very strong fundamentals. The two issue are loan growth and the yield curve. If CFRA is correct, these banks will be the new “fantasy” stocks that actually print money.


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UNUSUAL OPTIONS ACTIVITY SBUX STOCK

SBUX Looking For “Smarter” Growth

Unusual Options Activity SBUX 112321

SBUX and AMZN announced a partnership recently that I thought made some sense. AMZN is supplying them with cashierless technology, so SBUX can expand with smaller stores, less workers and likely robots making the coffee to perfection.

“The partnership with Amazon is the latest step in Starbucks’ plan to adapt its locations to consumers’ new habits. Nearly a year and a half ago, Starbucks announced it was accelerating plans to revamp its U.S. footprint, inspired by the pandemic’s abrupt shifts to how consumers wanted to buy and drink their coffee. In addition to shuttering as many as 400 stores in 18 months, the strategy included opening more pick-up locations in dense urban markets and installing walk-up windows and double drive-thru lanes in suburban areas.”

All this adds to more sales, lower costs, and greater profits.

The stock quickly bounced back after a crappy earnings report a few weeks. Take a look.

What Does the SBUX Stock Chart Say?

SBUX Chart - Options Activity 112321

SBUX stock seems like it wants to hold the $103 level. You can see the huge volume on that dip.

As the stock maintains slightly above the 50 and 200dm, the Bulls are looking for a retest of those highs. That starts with a move toward $117 first.

The Bears are pointing to that downtrend line over the last 4 months and a 50dma that is trying to cross the 200dma to the downside.

The options market seems to be leaning one way.

Options Activity in SBUX Stock

Unusual Options Activity Scanner SBUX 112321

There’s unusual options activity in SBUX front two-week options. I’m especially intrigued by the SBUX December 3rd $117 Calls. More than 20,000 have traded today.

The Risk Reward Breakeven Price is $119.85. It takes a $122-123 Target Stock Price to get the pointer to hit that option. This lines up well with what we’re seeing in the charts.

What do you think?

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UNUSUAL OPTIONS ACTIVITY DKNG STOCK

Where the Buyers At???

DKNG Trade Idea

Here’s a lesson that confuses most new investors…

These “Fantasy” stocks trade at extreme high price to sales multiples.
That’s okay if there is incredible growth quarter after quarter.

The BIG institutional players are buying into that growth.

During this process of getting in, the buy-the-dip mentality becomes the easiest strategy in the world.

The key thing is to not fall in love with the “next-Amazon.”

I know… “this time it’s different.”

It’s likely not.

When the BIG institutions decide to sell, the news isn’t going to matter.

It’s all about supply and demand.

They will sell shares to the buy-the-dip herd at the top, which will ultimately trap the crowd.

The crowd will wait for the BIG institutions to come back.

But they in turn will be waiting for the crowd to puke.

Enter DKNG.

What Does the DKNG Stock Chart Say?

DKNG Chart - Options Activity 112321

This is what most, and by that I am on record saying 90%, “fantasy” stocks will look like.

DKNG holders are in a dangerous spot here.

Remember, you have a 1-year head and shoulders pattern that is pointing a lot lower still. I showed you it developing HERE.

That’s not to say we don’t get a bounce back. Remember, on the right-side of the “momentum mountain” you get very sharp moves in both directions that seemingly make no type of sense.

The Bears are in control here and will lean all over $40-45 if it gets back up there.

I am afraid that the Bulls need a prayer here. The first step would be to get back above that November low from last year. Then work back toward $45, recapture the 50dma and put pressure on the shorts. That sounds like a lot of work.

The options are looking for a little magic here.

Options Activity in DKNG Stock

Unusual Options Activity Scanner DKNG 112321

There’s unusual options activity in DKNG front-week options. Specifically, almost 30,000 DKNG November 26th $38 Calls traded this morning. Most were bought in the morning rush, where they traded close to $1.00. Those options are now down 75%.

Be careful in these high-priced “fantasy” names.

ARKK is a good barometer of what’s going on.

The biggest sector that is holding tough is EVs. The leader, TSLA, is strong like bull.

At some point, they will get that sector as well.

Until then, play on!

Click here if you need more options trading picks with in-depth analysis.

Now go make some money!

Best,
Felix

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