Unusual Options Activity in HOOD, GM stock and SPCE

October 27, 2021

Unusual Options Activity Earnings 102721

Today, I offer you a unique way to think about earnings and options.

More specifically, pay attention to the straddle prices before the number and the price action of the stock after the report. Below, I’ll continue yesterday’s reveal of the magic “1.25.”

While I don’t generally like playing weekly earnings announcements, there is valuable information you can get from the options to trade around the stock.

Take a look.

UNUSUAL OPTIONS ACTIVITY

1. Are You Being HOOD-Winked?

2. Do You Believe THIS CEO?

3. “Wake Me Up at $19”

Find your own ideas with the Unusual Options Activity Scanner

Let’s get started...


UNUSUAL OPTIONS ACTIVITY HOOD STOCK

Are You Being HOOD-Winked?

Unusual Options Activity HOOD 102721

HOOD stock has quite the history only 3 months into its public life. The stock opened soft on the IPO only to go scorched-earth on the shorts a week later. Since then, it’s been no-bid.

The earnings report last night was a disaster. This morning, Robinhood CFO Jason Warnick was making the rounds:

“[the 2Q was] one of those idiosyncratic market events where there’s this massive interest specifically in Doge… We love it when those moments happen. It’s a great way to bring a lot of new customers onto the platform but we’re really thinking about investing in crypto over the long term. It’s gonna be impossible for us to accurately predict...revenue on a quarter-to-quarter basis.”

Investors don’t like to hear that. It offers zero confidence.

The revenues and immediate earnings seem to have been supporting the high price.

The Robinhood business model seems to be valued much lower.

The chart has broken down here.

What Does the HOOD Stock Chart Say?

HOOD Chart - Options Activity 102721

This $40 level in HOOD stock has been the line in the sand. That was broken today on decent volume. The stock is right back to the IPO-week range.

If you are a bull, you must be thinking long-term because the stock action is awful.

Bears are firmly in control under $40.

The unusual options activity in Hood is acting in a way that you would expect.

Options Activity in HOOD Stock

Unusual Options Activity Scanner HOOD 102721

Options are experiencing that IV Crush this morning. Notice the Implied Volatilities lower through May 2022. As you can imagine, there are a lot of Call Sellers closing out their near-term options

The HOOD October 29th $35 Puts attracted some buyers this morning. I like the idea, just not sure I like those options. I’d rather buy some time as the fantasy is still alive and well.

Keep in mind, the October 29th $40 Straddle closed at $4.40 yesterday. If we multiply that by 1.25, we get $5.50. This implied a $34.50 boundary on HOOD (“1.25” was introduced yesterday). Go check out today’s low price in the morning!

One last note…

The optics don’t look good HERE.


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UNUSUAL OPTIONS ACTIVITY GM STOCK

Do You Believe THIS CEO?

Unusual Options Activity GM 102721

TSLA explodes and GM drops on supply issues. GM CEO Mary Barra wants you to think everything is ok:

"We are selling everything we can. I wish we had more vehicles… We've been for years the No. 1 sales leader in the United States, and I am confident with the product line we have and some of the new products coming that we'll regain that as soon as we have the supply availability."

She even believes that she will catch TSLA by 2025.

Frankly, I really like GM… over the long term.

The chart looks good, but it needs some work.

What Does the GM Stock Chart Say?

GM Chart - Options Activity 102721

This GM stock “Bull Flag” is 2 years in the making.

We are dead center in the middle of that flag.

Unfortunately, GM lost the 50dma today on good volume. The 200dma should give it some support. If it weren’t for the supply chain issues, $64 probably would have been taken out.

The market is a voting machine. Today, it doesn’t like GM.

Long-term buyers should be salivating near $48.

Options Activity in GM Stock

Unusual Options Activity Scanner GM 102721

There are sellers of upside calls in GM out until January as the momentum in the stock has taken a hit.

Yesterday, the GM October 29th $58 Straddle closed at $3.00. Again, if you multiply that by 1.25, you get $3.75. $38 - $3.75 = $34.25.

Go check out the low in GM today.

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UNUSUAL OPTIONS ACTIVITY SPCE STOCK

“Wake Me Up at $19”

SPCE Options Trade Idea 083121

SPCE had been missing from the UOA board for a bit, but it caught my eye today.

On August 31st with the stock at $26.82, I wrote “Wake me up at $19.”

I guess today’s UOA is my reminder.

What Does the SPCE Stock Chart Say?

SPCE Chart - Options Activity 102721

SPCE stock still looks awful.

$23 was the first line of defense that failed with a large gap lower on big volume.

$17 is the second level I was looking at. I pointed it out in that note 2 months ago.

The $15 May low is now in sight.

SPCE stock is under its 50 and 200dma, which shows weakness.

Bears are obviously in control here and pressing.

The Bulls are looking for a “turn.”

Morgan Stanley had a note last week that didn’t see any catalyst until June 2022.

That said, long-term investors must be taking a good look here as $15-18 has been a 2-year buy-zone for this stock.

Given that, the unusual options activity in SPCE is not surprising as we’re at those make-or-break levels.

Options Activity in SPCE Stock

Unusual Options Activity Scanner SPCE 102721

Call options are leading Put options on a 2 to 1 ratio.

Implied volatilities are up indicating buyers are getting ready for a big move. There is scattered Call buying popping up like we see in the SPCE November 12th $24 Calls.

Earnings are on November 8th.

Rocket higher or Crash Landing?

We’ll soon find out.

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Now go make some money!

Best,
Felix

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