Unusual Options Activity in BBBY, TSLA stock and DIS

October 1, 2021

Unusual Options Activity Supply Chain 093021

I will keep this short.

First, BBBY and the problems they face are likely similar to every other retailer.

Second, the Supply chain issues are not a “problem” until the shelves are empty, which is starting to happen. 

Third, food inflation is really picking up steam. Remember, throughout history “the people” have united when food becomes a problem. Keep an eye on that!

Fourth, I will keep asking you this question: Is China purposely causing problems to weaken us?  

Lastly, go look at what happened to AAPL when China and the US were fighting over tariffs. When China is telling us that their lower and middle class needs to participate in the growth of the nation, that means the cost of labor is going up. Cost of labor going up has the same effect as a tariff. 

Here are today’s TOP 3 UOA…

UNUSUAL OPTIONS ACTIVITY

1. Disaster Strikes But Someone Sees Value HERE

2. TSLA Action Points to this Target

3. Growth is a Double-Edged Sword

Let’s get started...


UNUSUAL OPTIONS ACTIVITY BBBY STOCK

Disaster Strikes But Someone Sees Value HERE

Unusual Options Activity BBBY 093021

BBBY warned of serious problems at the company, mainly their (read: “our”) supply systems have broken down, inflation has ticked higher, and the Delta caused some traffic problems in the last quarter. 

Like a good CEO is supposed to do, Mark Tritton said:

“While our results this quarter were below expectations, we remain confident in our multi-year transformation.”

Right. Gotcha.

Look the numbers were terrible.  And the stock looks even worse.

What Does the BBBY Stock Chart Say?

BBBY Chart - Options Activity 093021

The stock is down over 25% today. You can see that bad things happen below the 50dma. 

The shorts are in control here as we have quickly moved to the 200dma.

There is a lot of technical damage on this drop.

That said, a slight ray of sunshine appeared in the options flow.

Options Activity in BBBY Stock

Unusual Options Activity Scanner BBBY 093021

There was unusual options activity in the October expiration. A seller of 17,000 BBBY October 15th $14 Puts came in right near the open an received $0.26. 

That’s the equivalent of 1.7 million shares. When comparing the options volume to the open interest we can see it was an opening trade.

It seems like it would be a large institutional buyer looking to own the stock at that level, rather than a short seller looking to take in some premium.



UNUSUAL OPTIONS ACTIVITY TSLA STOCK

TSLA Action Points to this Target

Unusual Options Activity TSLA 093021

Last week, Cathie Woods said she wouldn’t sell until it hit $3,000 … next year. It took her a week to change her mind as she sold $270 million a couple days ago. Then today, long-time bull Chamath Palihapitiya says he’s completely out.

Not the best news, but that said, the stock trades great!

What Does the TSLA Stock Chart Say?

TSLA Chart - Options Activity 093021

In the first half of the year, we were watching that flag developing in TSLA stock. When it broke through to the upside in July, the Bulls took control again. They have not relinquished that control since.

From an outsider, this break in July meant that the highs were increasingly likely to be reached again.

Lately, I’ve pointed out $780-$800. This is the area where Bulls lost control back in February. 

As the market is having a tough time, TSLA is showing a lot of relative strength.

You must respect that. 

Options Activity in TSLA Stock

Unusual Options Activity Scanner TSLA 093021

There’s a lot of unusual options activity in the front week from $780 to $800. You also see options flow in next week’s upside Calls as well.

Earnings are not due until after October 15th expiration.

But the market is signaling that we may not need to wait that long. A reverse in this market, maybe for the first of the month, and any good news from TSLA could see a significant move higher in the stock.



UNUSUAL OPTIONS ACTIVITY DIS STOCK

Growth is a Double-Edged Sword

Unusual Options Activity DIS 093021

The Mickey Mouse House has been having some difficulties as of late. Investors seem to be frustrated with how fast Disney+ is growing. 

In a nutshell that’s the market for you, give it some hope and the stock will rip. Then you need to maintain that growth or investors flee.

Disney CEO Bob Chapek didn’t give everyone the warm and fuzzy feeling last week at a Goldman Conference and the stock is now trying to hold support.

What Does the DIS Stock Chart Say?

DIS Chart - Options Activity 093021

You can see clearly that Wall Street has focused on Disney+ over the last year. From the announcement to the initial growth phase, the stock hit its highs above $200. 

As the Street decides on valuation, potential growth, and the stock price, DIS stock has been been digesting that huge move off the pandemic lows.

But it’s clear that the $170 level is the line in the sand. If the stock breaks down through this level, sellers will likely pile on. First stop looks like $155.

Needless to say, a pivotal level like that is perfect for options.

Options Activity in DIS Stock

Unusual Options Activity Scanner DIS 093021

There’s unusual options activity in the March 2022 options. Someone is rolling 14,500 of their October $160 Calls into 14,500 March $160 Calls.

While this is bullish options flow, I would also note that it is mildly bullish. 

By choosing an ITM Call Option, the buyer is concerned of the downside risk. Keep in mind that buying the ITM Call is the same as buying the Stock and the OTM Put (same strike & expiry). So, if you look at it that way, then you can see the slight worry.

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Best,
Felix

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