Unusual Options Activity in F stock, JPM and AMC

December 13, 2021

Unusual Options Activity TLT 121321

I was early in mentioning the dreaded “S” word.

While inflation talk has been the question, I think the hard-look-in-the-mirror question is:

Are we heading toward Stagflation?

The long bond is confusing many as it doesn’t want to go down with so much inflation in the air.

The Fed is on the brink of raising rates (so they say).

This could be a huge policy error that would only increasing the odds of a stagflation “iceberg, right ahead!”

That would be bad.

But something tells me the Fed will come up with a good reason to postpone multiple rate hikes when we get closer to those dates. 

A “wait and see” approach after some tapering buys the government some time.

Nobody wants a crash in the overall market just yet.

Meme stocks… well that’s a whole other story.


1. Is the Good News Priced In?

2. Are the Big Players Giving Up Here?

3. This AMC Trade Will Help You Sleep

Let’s get started...


Is the Good News Priced In?

Unusual Options Activity F 121321

There’s been a lot of positive news in F stock over the last week.

On Friday, CEO Jim Farley said:

“The company's first mainstream all-electric vehicle is expected to reach more than 200,000 units per year for North America and Europe by 2023… tripling its current rate.”

This coincides with huge demand the CEO is seeing for the F-150:

"We’re completely oversubscribed with our battery-electric vehicles, Lightning especially... The F-150 Lightning, America's bestselling vehicle. Everyone loves the electric version. They haven’t even driven it yet. Wait until they drive it. Zero to 60, like a 911 (Porsche). It’s just an incredible product. It powers your house for four days. We had to stop reservations, we got so many. We stopped at 200,000."

F stock has been on a tear. But is it all priced in?

What Does the F Stock Chart Say?

F Chart - Options Activity 121321

F stock took off in mid-September from $12.50 in mid-September to $21.50 last Friday. That’s quite the move.

The sideways action in the last 6 weeks has created a flag formation. The stock will likely spend some time digesting this large move.

The question is whether $19 holds as the bottom.

The 50dma is near $18 and then there’s the breakout from $16.5.

The breakout on Friday and then the retreat today back into the flag range has brought out the hedgers.

Options Activity in F Stock

Unusual Options Activity Scanner F 121321

While the Call vs Put volumes are even, there’s more call activity in the front-week options and put option activity in the January and February options.

The F February 18th $16 and $18 Puts have traded over 55,000 and 45,000, respectively. It appears that there is a lot of closing out January put positions and rolling them into these February Put options.

You can see the RR$ signaling $15.57 and $14.01, which would get F back to the 200dma.  

Earnings are in early February.

So, is the run in F over?

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Are the Big Players Giving Up Here?

All eyes will be on the Fed this Wednesday. Will Powell get more aggressive on the tapering?

Goldman Sachs is looking for 4 rate hikes next year. Morgan Stanley caved and moved in their hike sequence, although not as aggressive as Goldman.

With short-term rates about to get a boost and long-term Bonds bid (rates down), the yield curve is flattening.

Not so good for the banks.

JP Morgan’s chart shows you the predicament of the banks.

What Does the JPM Stock Chart Say?

JPM Chart - Options Activity 121321

JPM stock has been under pressure since early-November.

It’s now firmly under the 50dma and looking to hold the 200dma here for the third time in two weeks. A break of the 200dma could see the low $150s.

There’s also been support at $145 all year, but that’s not giving anyone any comfort right now.

There was an interesting trade in the options market that may give us a clue on what the institutions are thinking.

Options Activity in JPM Stock

Unusual Options Activity Scanner JPM 121321

There’s unusual options activity in JPM January options. Specifically, 14,000 of the JPM January 21st $170 Calls were sold at $1.04. Considering the option volume vs open interest, it appears that this was a long sale to close.

JPM earnings are due out on January 14th.

Not only is the stock under pressure, but the Call buyers are retreating.

Is there long-term inflation?

Will the Fed get very aggressive with hikes?

Remember, we are going right into the mid-term election. I suspect that the Biden Administration doesn’t want to make sudden moves with rates that could derail the market. Any pullback on that front flips the narrative in favor of the banks.

We’ll see.

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This AMC Trade Will Help You Sleep

AMC Unusual Options Activity 082521

A month ago, I showed you the AMC December 17th $50 - $100 Call Spread for $2.50 as a better play than owning the stock at $42. The risk of being long the stock was just too much at that level as the stock was approaching the end of the flag formation.

The stock is down almost $20, while the Call Spread lost $2.50.

Yet, there is still a lot of risk here to the downside in AMC as volumes creep up and put activity rises.

Take a look at the chart.

What Does the AMC Stock Chart Say?

AMC Chart - Options Activity 121321

The move in AMC started at $10-$12. There is no reason it couldn’t get back to that level or lower if the WallStreetBets crowd caves in.

AMC stock has lost the 50dma and the 200dma giving the bears full control here.

And the Bears are leaning on that volume you can see back in late-May and early-June.

A quick look at the options volumes tells you that the Bears smell blood.

Options Activity in AMC Stock

Unusual Options Activity Scanner AMC 121321

There is unusual options activity in AMC weekly options. Besides the total volumes, notice that there are more Put Options being traded than usual. The flow is quite chunky indicating that institutional buyers are involved.

With the stock cut in half, it may appear that the selling is over.

It might be. Or it might not!

Either way, if you believe this is way over done and AMC will climb out of this hole, then the AMC June 17th $30-50 Call Spread for ~$2.90 probably allows you to sleep better at night. If AMC gets through $50 at June expiration then that’s almost a 600% return.

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