Unusual Options Activity in FTCH stock, UPS and BABA

February 1, 2022

This is a trader's market, so be nimble. Be Patient. And wait for your levels.

The market is trying to "shake the tree" before making a very sharp move in one direction or the other.

You may not agree with THIS article, it is quite bearish, but there is some good logic in there.

The flip side is that there has been a lot of selling lately, and another burst higher will hurt many people that sold over the last 3 weeks. 

Take your time doing more reading/research during this time. Know the names that you want to get in, then nibble on stock or buy some calls when that level hits. 

And don't forget Puts!

Here are today's Top 3:

UNUSUAL OPTIONS ACTIVITY

1. Blowout Earnings and a Breakout for THIS Stock

2. More Call Buying in THIS Luxury eCommerce Name

3. A Technical Set-Up Worth Watching

Find your own ideas with the Unusual Options Activity Scanner

Let’s get started...


UNUSUAL OPTIONS ACTIVITY UPS STOCK

Blowout Earnings and a Breakout for THIS Stock

UPS (& FDX) are at the heart of one of the biggest trends in our lifetime, the move from in-store shopping to online.
It’s not just the in-store experience that is changing and will continue to change with the metaverse, it’s the delivery of the product. 

Earnings were blockbuster!

“United Parcel Service posted record quarterly earnings on Tuesday and forecast 2022 revenue above expectations, driven by higher shipping rates and e-commerce demand… Under Chief Executive Carol Tome, who took charge in June 2020, the world’s largest parcel delivery firm has prioritized lucrative deliveries over volume, fighting to win more contracts with healthcare firms and small and medium-sized businesses.”

But the real fight is just beginning…

The packages can get 90% of the way to your home with ease.

It’s that “last mile” which is the problem, making the companies who solve it an absolute fortune.

The race is not just UPS & FDX. It’s AMZN, UBER, GM, etc. etc.

What Does the UPS Stock Chart Say?

UPS Chart - Options Activity 020122

That’s a clear breakout in UPS stock today.

$220 now becomes support.

The good news is that the 50 and 200dma are fairly close, which would allow the stock to run a bit.

The previous range was $175 - $220, or $45 points. So, a $265 target seems reasonable.

The Bears will likely jump back in below $220 or higher from here.

Options Activity in UPS Stock

Unusual Options Activity Scanner UPS 020122

There was Call buying out of the gate in the weeklies.

But the real story in UPS is that the UPS Feb 4th $205 Calls went out last night at $5.70. Today they reached $28.30. That’s a 400% winner!

And you know what?

The Implied Volatility (IV) was really high yesterday. So, if you were thinking about selling options because UPS IV was ranked high then you made a small amount today on the IV Crush , but you lost huge on the stock going way up.

If you play the game the way I’m teaching it, and the way that the top Hedge Fund Managers in the world do it, then the Greeks and IV won’t matter much.

== > Make sure you watch this Options Trading Tutorial if you haven’t already

They will help in implementing some strategies, but in the end, direction, timing, and magnitude of the move will make up most of your P&L.

Think Risk-Reward and stop worrying what your Gamma, Vega or Theta is. Any guru telling you that is simply masking the fact that they don’t know how to choose the right option.


Unusual Options Activity - Ultimate Guide

UNUSUAL OPTIONS ACTIVITY FTCH STOCK

More Call Buying in THIS Luxury eCommerce Name

Unusual Options Activity FTCH 011821

Farfetch is in the right space … online shopping - Luxury, designer shopping!

So, their customers aren’t hurting that’s for sure.

And just a few weeks ago on January 3rd Wells Fargo named FTCH a top pick for 2022.

If they loved it then, they gotta love it now.

The stock lost 40% since the call but is on a bounce here.

What Does the FTCH Stock Chart Say?

FTCH Chart - Options Activity 020122

On January 18th, I highlighted the poor technical set-up in FTCH stock. It made another 30% move lower before finding that elusive “floor” near $18.

The resistance level is now at $27.50 and then $35.

The 50 and 200dma are pointing lower, which adds to the resistance.

Bulls are happy to see some floor established, but it needs to hold.

Options Activity in FTCH Stock

Unusual Options Activity Scanner FTCH 020122

There have been call buyers in the name. On January 18, I spotted a FTCH March 18th $30 Call buyer.

Today, someone is buying 12,000 of the FTCH April 14th $30 Calls for about $1.00.

One thing to notice, this strike is in the shaded area which is generally not the options that the Top 1% buy.

This makes me consider the possibility that it is a person who is short the stock and is looking for upside protection.

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Unusual Options Activity Improve Your Game

UNUSUAL OPTIONS ACTIVITY BABA STOCK

A Technical Set-Up Worth Watching

Unusual Options Activity BABA 100421

I always like watching scenarios that feel a bit binary… IF this happens, THEN this will happen.
BABA is one of those situations.

IF investors get comfortable with Chinese ADS stocks, THEN BABA flies higher.

That’s obviously a big IF, but that’s why it’s valued at such a low price.

I would add that the U.S. Listed stock may go away but then it would just become a Hong Kong stock.

Maybe a guy like Charlie Munger thinks that’s an ok risk and that’s why he bought the stock.

Imagine 10 years from now…

Does he care if BABA is in the U.S. or in Hong Kong?

What Does the BABA Stock Chart Say?

BABA Chart - Options Activity 020122

BABA is certainly trying to make a base down near $100. The chart shows the “W” it’s trying to form.

The right leg is pointing toward $150, which aligns with the gap down in November and close to the downtrending line over the last 15 months.

BABA stock is trying to recapture the 50dma here, which would be a good start.

Also, the MACD is showing a diversion, but it needs to keep the momentum going or else...

A break of $100 and well, something went really wrong.

Options Activity in BABA Stock

Unusual Options Activity Scanner BABA 020122

BABA earnings are due in the next several weeks.

I though a good exercise would be to look at the BABA February 18th $127 straddle.

It’s priced at ~$12.25, which gives us a 1-standard deviation range of  $111.75 and 142.25 by expiration.

This is narrower than the stock chart we mapped out.
In other words, the market is saying that BABA’s movement is quite limited here.

What do you think?

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

Now go make some money!

Best,
Felix

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