Unusual Options Activity in INTC, PTON stock and NCLH

November 16, 2021

Hedge Fund Managers

The 13Fs came out yesterday after the bell. 

I always think it’s a good idea to look at the chess pieces being moved around by the biggest Hedge Fund Managers. Remember, the big reveal is a snapshot from 6 weeks ago and a lot can happen in 6 weeks.

Nonetheless, I think it's important.

I would start your homework HERE. It’s a great summary.

Let’s get into today’s 3 interesting trades:

UNUSUAL OPTIONS ACTIVITY

1. Get Stronger Before You Get Better

2. Big Meeting This Week for INTC

3. What Happens If “Normal” is Not Normal?

Find your own ideas with the Unusual Options Activity Scanner

Let’s get started...


UNUSUAL OPTIONS ACTIVITY PTON STOCK

Get Stronger Before You Get Better

PTON Unusual Options Activity 090921

After that awful earnings report and a lot of soul searching, PTON wants to start over.

Recently in an interview, the PTON CEO John Foley described how the pandemic created a monster that ultimately was their demise:

"Every decision we were in for probably 18 months, every meeting we were in, we said, it doesn't matter. Just get the capacity we had to go from here to here, you know, a six-, seven-, eight-, ten-X increase in capacity across a lot of our manufacturing and supply-chain channels. And it was incredible. And it was an incredible job… [but it made the company] a little undisciplined.”

Now, they are trying to right the ship. And that generally starts with securing cash.

Today, PTON announced a ~$1bn stock offering of 23.9 million shares at $46… below market price.

Investors took it and bid the stock, which is a good start.

What Does the PTON Stock Chart Say?

PTON Chart - Options Activity 111621

PTON stock has a long road ahead of them trying to prove that the original “fantasy” is still there.

Today’s offering and the stock price action is telling us that investors still believe in the long-term story and are happy to pay $46 … even $53 as we see volume ticking through here.

But, it’s very likely these buyers are longggggg term holders.

The short-term momentum is likely lost for a while here.

Just look at all of those PTON holders trapped above $80.

This has become a “show me” stock.

The Bears will be leaning against $80 until PTON can gain back some momentum.

I get that $80 is a long way from $53, but options with 65-70% implied volatilities need more room.

Options Activity in PTON Stock

Unusual Options Activity Scanner PTON 111621

The options flow between Calls and Puts in the weeklies is balanced as traders try to make sense of the where PTON should trade.

There is some scattered Call buying in December and January, but after that time frame the volumes get lighter.

If you think that $80 level is a "brick wall" for now, and I do, then it’s best to stay away from PTON options with maturities longer than January. And even then, I would be very careful.

The buyers today told you they would pay $46 in size, and the bears will defend $80.

Again, it’s very hard to win with that price range when trading >3month options at 65-70% IVs.


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UNUSUAL OPTIONS ACTIVITY INTC STOCK

Big Meeting This Week for INTC

Unusual Options Activity INTC 111621

INTC disappointed the Street with underwhelming revenues on their last earnings report.

And while new CEO Pat Gelsinger is trying to expand manufacturing in the U.S. and around the globe, the U.S. government has other plans.

“The Biden administration spurned a plan by Intel Corp. to increase production in China over security concerns, dealing a setback to an idea pitched as a fix for U.S. chip shortages.”

INTC is throwing an investor meeting this week where management will try to jumpstart their stock.

What Does the INTC Stock Chart Say?

INTC Chart - Options Activity 111621

This chart is a mess.

INTC stock has walked aimlessly between $43 to $67 over the last two years.

While the new CEO announcement got everyone excited early this year, we learned that he is not a superhero just yet.

INTC is below the 50 and 200 dma as investors have lost confidence in the stock.

The Bulls need a small victory this week – good news, a story they can run with, and a recapture of the 50dma.

Without that, the Bears will pounce here and make $52 that much harder to get through.

Options Activity in INTC Stock

Unusual Options Activity Scanner INTC 111621

There is some unusual options activity in INTC going into the meeting. More than 40,000 INTC December 3rd $52 Calls were bought this morning for approximately $0.50.

The Risk-Reward Breakeven Price is $54.19 here. This means the buyer is looking for INTC to reach $55.

$55 is the level it dropped from after the earnings call.

Also, the distance between the recent low and high ($47.50 and $52.00) is $4.50. Add that to yesterday’s low and you get close to $54.50.

So, his target makes some sense. What do you think?

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UNUSUAL OPTIONS ACTIVITY NCLH STOCK

What Happens If “Normal” is Not Normal?

The Cruise liners and airline stocks continue to have trouble.

A couple of months ago in Winning Picks Premium, I tried shorting CCL with Puts and well… got stopped out for a loss. Looks like my timing was off.

The thesis was that these cruise liners, already saddled with a lot of debt, would be in desperate need for cash after the fantasy of re-opening the economy didn’t get everything back to "normal" fast enough.

Yesterday, NCLH announced an $800 million exchangeable debt-offering. The others should not be far behind. In fact, they better hurry before that window closes.

The NCLH chart is breaking down.

What Does the NCLH Stock Chart Say?

NCLH Chart - Options Activity 111621

NCLH stock has been ranging between $22 and $34 all year.

The stock is quickly breaking down here over the last couple of weeks, dropping sharply through the 50 and 200dma.

If investors are finally getting the hint that “normal” might not come for another year and it isn’t going to look like 2019, then NCLH (along with the other cruise liners) are vulnerable.

A break of $22 likely drops it quickly to $17, maybe even $15.

Options Activity in NCLH Stock

Unusual Options Activity Scanner NCLH 111621

With the stock down 7%, options flows are telling a slightly different story as Calls are outpacing Puts by 3 to 1.  The call buyers are scattered in the name. For example, in the NCLH December 17th expiration they’re buying the $25 and $27 Calls.

My suspicion is that most of these trades are adjusting risk-reward, where they are selling out of stock to get long Calls.

Again, $22 is a dangerous pivot level in the stock. If that breaks, it likely means the long-term money is giving up on NCLH.

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

Now go make some money!

Best,
Felix

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