Unusual Options Activity in FCX stock, OVV and WFC

January 12, 2022

According to some people, the Metaverse is the next big thing.

That’s fine.

But it's eye-popping to see the amount people are spending on virtual land.

“It’s no secret the real estate market is skyrocketing, but the Covid pandemic is creating another little-known land rush. Indeed, some investors are paying millions for plots of land — not in New York or Beverly Hills. In fact, the plots do not physically exist here on Earth.
Rather, the land is located online, in a set of virtual worlds that tech insiders have dubbed the metaverse. Prices for plots have soared as much as 500% in the last few months ever since Facebook announced it was going all-in on virtual reality, even changing its corporate name to Meta Platforms.”

I had a vision of a 27-year-old living in his parent’s basement telling them the exciting news.

“I just bought a brand-new house for $250,000 with my Bitcoin winnings!”

“Wow! When are you moving out?” they ask slowly, holding back a smile, trying to hide their relief.

Confused, he asks, “Why would I move out?”

LOL, when the Metaverse meets reality.

Here are Today’s TOP3 …

UNUSUAL OPTIONS ACTIVITY

1. Expecting a BIG Move in THIS Oil Stock

2. Reducing Risk in THIS Bank Name Makes Sense

3. How to Play FCX Into Earnings

Find your own ideas with the Unusual Options Activity Scanner

Let’s get started...


UNUSUAL OPTIONS ACTIVITY OVV STOCK

Expecting a BIG Move in THIS Oil Stock

Unusual Options Activity OXY 091521

Oil and Oil stocks are on a run here.

And OVV, formerly Encana, is in the pack. Their assets include prime real estate in the Permian, Eagle Ford, Montney, and Duvernay resource plays.

The company has a decent amount of debt, almost ~$5Bn, which was a big problem during the early stages of the pandemic. As oil continues to move higher, that big problem becomes a huge windfall in the form of cash flows. Management is now using those strong cashflows to reduce the debt load and strengthen the balance sheet.

Oil stocks started this morning off strong and have since pulled back. Maybe this recent move is a little too much too quick?

What Does the OVV Stock Chart Say?

OVV Chart - Options Activity 011222

OVV stock is in a bullish trend trading above the 50 and 200dma.

The MACD is steadily moving higher here.

And the stock continues to make new highs since the pandemic lows.

OVV also attempting to break out of a 14-year slide (go look at a chart since 2007). Check out where this stock was trading prior to the GFC.

The Bulls are getting excited about this ABCD pattern forming which points toward $50.

The Bears are likely going to lean on this $40 range until the Buyers prove that they want new highs.

Options Activity in OVV Stock

Unusual Options Activity Scanner OVV 011222

On October 6th, someone stepped in to buy almost 17,000 OVV January 21st $38 - $50 Call Spreads for $2.50.

Today, that person is selling that Call spread to close at $1.85 and rolling into 17,000 April 14th $45 Calls for $2.30.

The RR$ on these $45 Calls is $53.67.

Earnings are due in mid-February.

Oil to $100? What do you think?


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UNUSUAL OPTIONS ACTIVITY WFC STOCK

Reducing Risk in THIS Bank Name Makes Sense

Unusual Options Activity WFC 010321

Rising long-term rates should help banks. But really, to get them to race higher the yield curve has to steepen.

That said, Piper Sandler upgraded WFC stock to overweight from neutral and hiked the price target on the stock to $64 from $50.

“We were also sensitive to how long it might take to effect a turnaround. But the group’s updraft has left valuations higher for many banks, and the market’s focus on rates has narrowed the sense of differentiation among stories. Thus, we find ourselves searching for names that still have both multiple touchpoints for opportunity and a compelling valuation. And while WFC is certainly not without its risks, it fits the bill better than many others.”

The main thing holding back WFC, besides repeated scandals over the last 4 years, is a $1.95T asset cap placed on them by the Fed because of these scandals.

If/when that is released the stock will get a significant bump higher. Keep in mind, there are no signs that it will anytime soon.

What Does the WFC Stock Chart Say?

WFC Chart - Options Activity 011222

This is a long-term monthly chart on WFC stock going back 16 years.

I thought it would be interesting to see how we are quickly closing in on the all-time highs. Maybe too quick?

On a daily chart, we see a solid stock above the moving averages and breaking out of a 6-month range. But the big level is this $58ish high.

$52 should give you some support.

I like the banks, but can’t they just come back down a little bit?

Options Activity in WFC Stock

Unusual Options Activity Scanner WFC 011222

Given that backdrop, it makes sense to see some risk-reward shuffling at these levels.

It appears that someone sold out of 18,000 WFC February 18th $52.50 - $57.50 Call Spreads to close. And then rolled into 10,000 WFC $57.50 - $62.50 Call Spreads for $1.17 to open.

This took a lot of money off the table heading into this Friday’s earnings report.

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UNUSUAL OPTIONS ACTIVITY FCX STOCK

How to Play FCX Into Earnings

Unusual Options Activity FCX 110821

Copper is bid breaking above $4.50 looking for $5.00.

If we get $5.00 copper, these copper miners will go berserk!

FCX is producing strong cash flows at $4.00. They have already done the heavy lifting on reducing their debt load.

Now, they have stated that they want to return free cash flow back to shareholders with dividends and share buybacks. I’m going to make you work and see how much they will produce in EBITDA at $5.00. CLICK HERE and go to page 19 in the earnings presentation.

The more we go green, the more Copper will stay bid.

What Does the FCX Stock Chart Say?

FCX Chart - Options Activity 011222

That chart looks very good.

FCX stock spent most of 2021 between $30 and $46. Since October, the 50dma has turned back up and working its way higher leading the 200dma.

The stock has made a quick move to the highs in the last 4 weeks.

I’m guessing it needs a breather.

Only a quick one though.

This chart has some explosive characteristics.

If it breaks this range above $46, you could see a big run here making it hard to be too bearish. Bears need a stop at the highs and then must contend with big support in the $40-$42 range.

Options Activity in FCX Stock

Unusual Options Activity Scanner FCX 011222

There has been a large buyer of FCX February 18th Calls in the last week. You can see the Open Interest is 35,000 options.

Today, someone came in to buy 37,000 FCX February 18th $46 Calls for $1.97. This is clearly playing a breakout in the stock.

The RR$ for these $46 calls is $51, which means a Target Stock Price close to $53.

Earnings are expected at the end of January.

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

Now go make some money!

Best,
Felix

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