Unusual Options Activity in LYFT stock, CCJ and GM

February 9, 2022

The CPI number is pretty important tomorrow.

Apparently, there are whispers that it will be light, hence the move higher today.

But have you seen the TLT lately?

Remember what Mr. Druckenmiller said after Powell seems to have come clean on inflation and the Fed’s intentions:

“We can now heed the message of the bond market again no matter what it may be."

The TLT broke the 50dma to the downside in the last week.

It’s now sitting on the 200dma.

Tell me where the bonds go… and I’ll tell you where the market goes.

UNUSUAL OPTIONS ACTIVITY

1. LYFT-Off on a Re-Opening?

2. Relentless Hedge Fund Keeps Buying THIS

3. Mixed Signals in GM … Now What?

Let’s get started...


UNUSUAL OPTIONS ACTIVITY LYFT STOCK

LYFT-Off on a Re-Opening?

LYFT earnings came out after the bell yesterday and traded off in after-hours.

Here are the key numbers:

  • Earnings per share: 9 cents, adjusted, vs 8 cents expected in a Refinitiv survey of analysts
  • Revenue: $970 million vs $940.1 million expected by Refinitiv
  • Active riders: 18.73 million vs 20.2 million expected, per StreetAccount
  • Revenue per active rider: $51.79 vs $46.54 expected, according to StreetAccount

The stock rebounded today, pulling UBER with it.

Recall, UBER has earnings this evening and an investor day tomorrow.

The LYFT chart is interesting:

What Does the LYFT Stock Chart Say?

LYFT Chart - Options Activity 020922

The stock has regained the 50dma on great volume and that MACD diversion looks like it was a good sign of selling exhaustion.

The next level is near that $45 resistance. Through that and the Bulls will eye $50.

The Bears will lean against that $45 level and the sloping down 200dma. Above that and they will need to rethink the position.

Options Activity in LYFT Stock

LYFT Chart - Options Activity 020922

The LYFT $41 Straddle went out yesterday at $6.25, that’s over 15% breakevens!

It’s really quite hard to win expecting >15%.

Throw in IV Crush and you are asking for trouble.

>>> What is IV Crush?

Look at the ATM Implied Volatilities in April down 13.7 vol points or more than 20% from yesterday’s close. That’s a lot!

 LYFT is seeing some call buying today, it will likely trade in sync again with UBER tonight/tomorrow.

Winning Picks Premium Members are long UBER (full disclosure, already up +100%) 


Pick the Right Option

UNUSUAL OPTIONS ACTIVITY CCJ STOCK

Relentless Hedge Fund Keeps Buying THIS

UOA Trade Idea CCJ 090221

The market liked CCJ’s earnings report.  These comments by CCJ CEO Tim Gitzel were strong:

“Since 2016, with our planned and unplanned production cuts, inventory reduction and market purchases, we have removed more than 190 million pounds of uranium from the market, which we believe has contributed to the security of supply concerns in our industry.
In alignment with 70 million pounds of additional long-term contracts added to our portfolio since the beginning of 2021 and the improving market sentiment that provides us with leverage to higher prices under our market-related contracts and for our unencumbered productive capacity, we are pleased to announce that it is time for Cameco to proceed with the next phase of our supply discipline decisions. And it is time to reward those who have supported our strategy. We are laying claim to our tier-one incumbency advantage as we further position the company to capture the value we expect to come from the growing demand for nuclear energy. driven by the increasingly undeniable conclusion that it must be an essential part of the clean-energy transition.”

Add the growing demand from the Uranium ETFs and things could get interesting.

What Does the CCJ Stock Chart Say?

CCJ Chart - Options Activity 020922

CCJ stock may have trapped a few sellers down there in the blue box with this quick jump.

It’s regained the 50 and 200dma on a decent volume gap and that Head & Shoulder formation might have played itself out.

Stock looks good.

But the real story today in CCJ is the options volume.

Options Activity in CCJ Stock

CCJ Chart - Options Activity 020922

We’ve seen this huge buyer before. He got busy again today.

It appears that he is rolling down his March calls and adding to his June position.

Roll Down March

B 5,000 March 18th $21 C $2.56

B 5,000 March 18th $22 C $1.93

S 15,000 March 18th $28 C $0.31

Roll Rest of March to June

S 30,000 March 18th $28 C 20k $0.23 outright.

B 16,000 June 17th $32 C $0.72

Buy June Call Spread

B 20,000 June 17th $27 C $1.49

S 25,000 June 17th $36 C $0.35

How’s that for a trade?

The buyer is clearly looking for the mid-$30s by June expiry.


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UNUSUAL OPTIONS ACTIVITY GM STOCK

Mixed Signals in GM … Now What?

Unusual Options Activity GM 100421

Nomura downgraded GM today, a day after Morgan Stanley did the same. Nomura went to a Neutral from a Buy and cut their price target to $56 from $66:

“We push back GM’s recovery from the supply chain issues by one quarter. In the near term, we expect the transition to EVs to limit profit growth… Based on GM’s commentary at the 4Q21 results briefing, we now expect it to reinvest cash into building its EV and AV (Cruise). businesses, while dialing back on shareholder returns. We think this is a prudent strategy, although it caps the outlook for near-term shareholder returns.”

Citi, on the other hand, kept it’s buy rating and said:

“Our conclusion is that not only is GM not over-earning this year, but is actually quite likely under-earning. What’s the Street missing? That GM actually has fairly easy relative price/mix comps due to being in the lower point of its product cycle. We estimate this opportunity is worth ~$3bln over the coming years.”

Considering that GM is up 3% today, the market might be tired of selling the stock.

What Does the GM Stock Chart Say?

GM Chart - Options Activity 020922

That blue box is usually a bullish sign, where the gap lower brings in the sellers and then the gap higher leaves them behind.

Only time will tell.

The $48 level seems to be where the long-term big boys live. Below that level on volume and something is wrong.

Options Activity in GM Stock

GM Chart - Options Activity 020922

There’s consistent Call & Put buying in the front week playing both sides of the coin.

I like the upside in GM, but I suspect a move higher needs a little more time.

GM stock has dropped just as much as these other EV names without enjoying the same run up.

The stock is cheap and offers great reward IF they can execute.

The Street thinks that’s a big “IF.”

We’ll see.

What do you think?

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Best,
Felix

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