Unusual Options Activity in CLF, SOFI stock and PAGS

October 11, 2021

Unusual Options Activity Evergrande 101121

Don’t forget about this $70 Trillion asset class called China Real Estate.

If Real Estate falls, China falls.
And if China falls, the world is in a little bit of trouble.

Large bankruptcies like Evergrande take time to play out.

But it’s hard to contain investor psychology when average citizens get wiped out on their real estate investments and prices start dropping.

Real Estate isn’t like stocks at the point of a turn.

The “turn” takes much more time to develop. Evergrande has been developing. And it seems to be picking up steam.

Once the turn is actually a full turn, it then becomes difficult to turn it around again.

The first question is: Will China bail out Evergrande?

And then the more serious question: Can China keep the real estate industry from crashing?

Stay tuned.


1. THIS Fintech Getting Some Love Today

2. One Man’s Trash is Another Man’s Treasure

3. Brazil Central Bank Killing This Fintech

Let’s get started...


THIS Fintech Getting Some Love Today

Unusual Options Activity SOFI 101121

Morgan Stanley initiated SOFI as Overweight with $25 Price Target today. In their hey are looking at two big catalysts in the near future to get this stock moving again.

“Student loan refinancing has been on ice since the US government administration put federal student loans into deferment in March 2020. Why refi into a lower rate when you don’t have to pay anything at all during deferment and just accrue interest on your federal loan? In February 2022 this all changes.”

Approval of SOFI’s Bank charter may only be a few months away. This would be a great way to improve their margins by sourcing cheaper money to lend.

What Does the SOFI Stock Chart Say?

SOFI Chart - Options Activity 101121

SOFI stock held $14 several times over the last couple of months.

$17.50 seemed to be another sticking point, but the stock broke through that on good volume today. Let’s see if it holds.
SOFI is firmly above the 50dma and recaptured the 200dma today.

The share volume has been strong over the last 4 weeks.

Next stop seems to be that supply from June in the $21-25 range.

Options are giving the same message.

Options Activity in SOFI Stock

Unusual Options Activity Scanner SOFI 101121

There is unusual options activity in the weekly Call Options anticipating more momentum in the name. There’s also continued buying in the November 19th $20 Calls as more than 12,000 of those have hit the tape.

SOFI earnings are in early November.

At Winning Picks Premium options alert service, we are long another fintech name with an equally good story, great momentum, less of a following, and enormous potential with earnings in a few weeks. It’s up 70% in 3 days but the expectation is for a 300% move. Get involved!  


One Man’s Trash is Another Man’s Treasure

Unusual Options Activity CLF 101121

CLF buys FPT to gain a meaningful presence in the Scrap business.

CLF produces flat-rolled steel and sells it to customers. After using the steel, customers are left with scrap. Flat rolled steel generates “prime” scrap which CLF buys in the market to feed its Electric furnaces. By buying FPT, CLF has cut out the middleman which should improve margins. CLF CEO Lourenco Goncalves stated:

“With all the new flat-rolled EAF (electric arc furnace) capacity coming online in our market over the next four years, prime scrap will only become more and more scarce.”

He had mentioned the importance of prime scrap to a Clean Energy movement in previous earnings report. So, it’s not surprising that he went after one. This vertical integration seems to be a smart deal that further strengthens CLF’s position.

What Does the CLF Stock Chart Say?

CLF Chart - Options Activity 101121

CLF stock is coming way off its $27 highs back in August. It found support at $19, which is also the 200 dma.

The stock is firmly between the 50 and 200dma.

CLF stock held $19 twice recently before making a small comeback here with the commodity stocks rebound and this deal announcement.

I am not convinced that it is out of the woods just yet.

Options Activity in CLF Stock

Unusual Options Activity Scanner CLF 101121

While the unusual options activity is heavily tilted to the Call Options side, 3 to 1, the options activity is mainly in this week’s options. Most of the buying is in the CLF October 15th $21.50 through $23.00 Call options.

The Risk-Reward Breakeven prices range from $22.80 to $23.86, which means buyers are pressing for a solid move towards $24-ish.  That would be a big move.

But with earnings in a couple of weeks, I am wondering why more buyers are not showing up in the November or December options.


Brazil Central Bank Killing This Fintech

Unusual Options Activity PAGS 101121

PagSeguro (PAGS) is a high-flying, Brazilian Fintech growth stock in the merchant payments (PagSeguro) & banking space (PagBank). It appears that the country’s central bank is looking to cap fees on prepaid card transactions. There is likely more news than that as the stock has gotten crushed.

This is a big fast-money Hedge Fund name, so the volatility is high as everyone is running for the door.

What Does the PAGS Stock Chart Say?

PAGS Chart - Options Activity 101121

And that’s what happens to a growth stock that may lose its growth.

People bail first ask questions later.

Not much to say except “Wow!”

Options Activity in PAGS Stock

Unusual Options Activity Scanner PAGS 101121

Unusual options activity in PAGS is interesting. There are Call buyers stepping into 20,000 of the PAGS May 20th $40 Calls for about $3.50.

In addition, January option flows are seeing a customer roll down his position from 10,000 of the $47.50 Calls and 15,000 of the $42.50 Calls into 10,000 of the $35 Call options.
With the stock getting killed, it’s likely that these Hedge Funds have also sold some or all of their long stock and will look to use leverage at these levels.

We were long this name in Winning Picks Premium back in May with September options.
It might be time to revisit.

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