Unusual Options Activity in FB, AMD stock and PLTR

October 26, 2021

Unusual Options Activity Bull vs Bear 102621

Here’s a good bullish vs bearish case on the market.

My 2 cents…

I am bearish on the final outcome whenever that may occur.

But, in the meantime, I’m going to respect the undeniable strength in the flows.

UNUSUAL OPTIONS ACTIVITY

1. What to Expect for AMD Earnings

2. Where FB Goes From Here

3. Setting Up For PLTR Earnings

Find your own ideas with the Unusual Options Activity Scanner

Let’s get started...


UNUSUAL OPTIONS ACTIVITY AMD STOCK

What to Expect for AMD Earnings

AMD reports earnings after the bell. The stock has made a tremendous move higher … not without some volatility.

Going into the earnings, we have an interesting setup:

What Does the AMD Stock Chart Say?

AMD Chart - Options Activity 102621

AMD stock is trading at all-time highs. But can it go higher?

The July-August breakout was a $37.50 move higher. It then came back down to $100, and has now taken off again.

If I add $37.50 to $100, we get $137.50. That’s a potential upside target.

To the downside, a 50% retracement from the recent high is close to $114.

This coincides with that September resistance that was broke. I think you find support there and then at the $108 level, which is the 50dma.

Options Activity in AMD Stock

Unusual Options Activity Scanner AMD 102621

There’s unusual options activity in the AMD front week due to earnings as investors tidy up their positions. While many gurus use the simple ATM straddle prices to show an expected range around the stock, it’s not necessarily the best way to look at it.

A better way to look at it, would be to multiply the ATM straddle by 1.25 and then add that to the strike price. This would give you an approximate 1 standard deviation range. For example, the $124 straddle is $7.80. Multiply that by 1.25 and you get $9.75. Up and down from $124 and you get $113.25 and $133.75. So, the market expects the stock to be between this range 68% of the time.

Another way to look at the potential range is to look at the New Options Chain and see the Risk-Reward Breakeven Prices in the unshaded range. I like looking right in the middle of both ranges. This tells me $135 on the upside ($127-128 call strikes) and $113.50 on the downside ($119 and $120 put strikes).

That’s pretty close to what the charts are saying as well.


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UNUSUAL OPTIONS ACTIVITY FB STOCK

Where FB Goes From Here

Unusual Options Activity FB 092221

FB is a “lead horse” in the market. When FB is down, that causes trouble with the rest of the pack. Yesterday, they showed an earnings beat but revenues were lower. Worse the whistleblower news seems to be picking up steam and putting more pressure on the company.

So much pressure that FB is considering changing its name. There are rumors that CEO Zuckerberg will make that announcement in the coming weeks and addresses the new future of the stock in the coming weeks. Facebook is heading into the metaverse!

In the meantime, the company is dealing with real-life problems, stating that the earnings report

“reflects the significant uncertainty we face in the fourth quarter in light of continued headwinds from Apple’s iOS 14 changes, and macroeconomic and COVID-related factors.”

The market isn’t impressed.

What Does the FB Stock Chart Say?

FB Chart - Options Activity 102621

After a big run, FB is now breaking down.

Since breaking the 50dma in mid-September it has unwound much of the move after the breakout in April-May.

Today, the stock is losing more footing here as it loses the 200dma.

$305 gives us some support, but it’s safe to say that there is some significant damage in that uptrend, which means it’s more likely that the stock needs some time to find support before thinking about those highs.

The options market seems to agree.

Options Activity in FB Stock

Unusual Options Activity Scanner FB 102621

While there is significant option volumes in the front-week options, notice the declines in the IV due to the IV Crush after earnings. Keep in mind, the market had the 1 standard deviation move at around $25 up or down. -$17 is well within that range.

The December ATM straddle is around $36, which makes it hard to make money buying FB options here after this drop in the stock and considering the chart set-up.

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UNUSUAL OPTIONS ACTIVITY PLTR STOCK

Setting Up For PLTR Earnings

Unusual Options Activity PLTR 091521

The bulls and bears are very passionate about PLTR, yet no one really knows exactly what the company does, although this is part of the bear story.

The big moment in this stock will be whether or not the company can substantially grow their customer base outside of its main customer, the U.S. Government. If so, the stock makes a sharp move higher.

However, the bears keep pointing to the Biden administration at odds with Peter Thiel’s Trump ties, which could put PLTR contract renewals in jeopardy.

Either way, we’re back again a few weeks before earnings and the stock remains in its 7-month range.

What Does the PLTR Stock Chart Say?

PLTR Chart - Options Activity 102621

PLTR stock has ebbed and flowed between $20.50 to $27.50 since late-February. One could argue that there is a slight bias upward (dotted line).

It has recaptured the 50 and 200dma yesterday, which is positive.

The stock opened well in response and traded higher but has given back its gains.

That’s not holding back the options flow.

Options Activity in PLTR Stock

Unusual Options Activity Scanner PLTR 102621

Call options are 5x more active than Put options today. There is unusual options activity in PLTR weekly options, both this week and next week.

Buyers were reaching for the $26 Calls in those expirations at the open. It has not worked.

With earnings due on November 11th, the more relevant options activity is in the November 19th options where buyers are also coming into the $26 Calls but also appear to be buying the $30 Calls for a “long-shot.”

If you like PLTR, the November $26 Calls look like the better play with a Risk-Reward Breakeven Price of $29. This would need a $30 Target Stock Price which likely gets hit if PLTR can break through $27.50 on earnings.

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

Now go make some money!

Best,
Felix

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