Unusual Options Activity in MPC stock, CRM and CLF

January 5, 2022

The market is now implying that the Fed will raise rates in March.

I think this is their "out":

“In particular, the possibility that COVID-19 cases could continue to rise steeply, especially if the Omicron variant proves to be vaccine resistant, was seen as an important source of downside risk to activity, while the possibility of more severe and persistent supply issues was viewed as an additional downside risk to activity and as an upside risk to inflation.”
"Members also agreed that, with the emergence of the Omicron variant, it was appropriate to note the risk of new variants of the virus in their assessment of risks to the economic outlook."

We'll see.

Here are today's Top 3 UOA trades...


1. Smart Hedge Fund Wants Leverage in THIS Stock

2. Time to Buy Options in This Tech Name?

3. I still love this Steel Stock

Let’s get started...


Smart Hedge Fund Wants Leverage in THIS Stock

Unusual Options Activity MPC 010521

We spoke about OXY yesterday and the significant leverage you get owning the stock. Using options gives us higher octane in the event oil makes a move higher.

MPC is another name with great leverage.

So, if oil goes higher, then MPC explodes.

And it looks like the stock is trying to break out today.

What Does the MPC Stock Chart Say?

MPC Chart - Options Activity 010522

MPC stock is on a 3-day spike off the 50dma.

Today, the stock rallied through the October high at $68 with decent volume so far.

MPC stock has been in a $8 range, so you can see a move toward $76. Using the flag, you can get closer to $80.

The 200dma is walking its way up and the MACD looks strong.

The Bears are licking their wounds here and will likely get aggressive if MPC stock can get back into that range under $68.

Options Activity in MPC Stock

Unusual Options Activity Scanner MPC 010522

There’s some unusual options activity in MPC options.

On November 4th and 5th, a buyer rolled up their Calls into 40,000 MPC January $67.50 Calls. Today, they are rolling 15,000 of those calls into 15,000 MPC April 14th $75 Calls.

To give you some perspective on their Target Stock Price, the RR$ on these $75 Calls is $83.87. That’s quite a move!

It also looks like they bought 30,000 MPC Jan 14th $72 Calls. Although, they probably sold some stock on the way up to risk manage their position.

I suspect “they” is Elliott Management.

Stop Guessing - Mobile


Time to Buy Options in This Tech Name?

Unusual Options Activity CRM 010521

UBS downgrades CRM today from a Buy to Neutral, and cuts the price target from $315 to $265.

The analyst thinks corporate tech spending could slow in the coming year and that Salesforce is also hampered by struggles of its MuleSoft unit, where customers have multiple problems with the product.

“Bottom line, we worry that more ‘front-office/sales and marketing’ tech spend was pulled-forward in 2020/2021 than most investors (and even software firms) think. This [Mulesoft customer] feedback suggests to us that MuleSoft might be a longer turnaround than just a quarter or two.”

That’s quite a blow to the company that spent $50Bn on Slack.

CEO Marc Benioff is one of the best salesmen out there, so we’ll see what he has to say about this in the coming earnings report.

What Does the CRM Stock Chart Say?

CRM Chart - Options Activity 010522

CRM stock lost the 200dma today near $254.

The $252 level seems to be the pivot level in the stock going back a year. You can also see that bigger support on the downside comes at $205.

The Bulls will likely need some time here to repair this technical damage done to the stock. With growth and Tech stocks under pressure, the bulls are hoping for a quick bounce back to the 200dma… at best.

The Bears are firmly in control here and will lean heavily on the $245-250 rage for now.

Options Activity in CRM Stock

Unusual Options Activity Scanner CRM 010522

That said, it appears that someone has hope.v

A buyer came in for 7,000 CRM February 18th $260 Calls for ~$2.40.

The RR$ is $275.31, which is way up there near the 50dma… that looks really high to me.

This strikes me as an investor who is selling his stock and leaving a Call option just in case there is a bounce back.

Notice, he didn’t even buy the earnings due in March.

Lastly, if there was a CRM February 18th $234 straddle, then it would be priced near $20, which gives me a 1-standard deviation range of $210-$260. That coincides nicely with our range, meaning that the market looks to have CRM stock priced very well.

New Options Chain - Mobile


I still love this Steel Stock

Unusual Options Activity CLF 010521

There's big money flowing into these commodities names, and steel is no exception. CLF stock has finally woken up again.

The stock is ridiculously cheap if (Big “IF”) steel prices can hold.

The CEO has made a tremendous forward-looking acquisition with FPT to solidify its vertically integrated strategy. Frankly, I love that buy and the risk-reward in the stock.

What Does the CLF Stock Chart Say?

CLF Chart - Options Activity 010522

CLF stock is up 7% today on a strong commodity day.

It has traded in this $19 to $26.50 range for the last 6 months.

Before that, you can see the “methodical” choppiness from January through August. There were too many retail Call buyers in the name during that and the Options Market Makers carved them up really good.

As the Call buying slowed down in the last few months, CLF has had more room to run around. If it can break $26.50, believe me the mid-$30s are not out of the question.

The stock recaptured the 50 and 200dma this week on increasing volume.

The MACD is looking very strong and even shows signs of a positive divergence.

The Bears are in the “steel prices can’t sustain these prices” camp.

We’ll see.

Options Activity in CLF Stock

Unusual Options Activity Scanner CLF 010522

Call volume is outpacing puts on a 4 to 1 ratio. Most of the volume is in the CLF January options. I highlighted the Open Interest in January to show you significant Call Open Interest in that month. This is the leftovers from several months ago.

Call Open Interest drops in February and March.

Earnings are in late-February, so you will need March expiration to hear what the CEO has to say.

Now, go to the options chain and see what the RR$ is for the CLF March $35 Calls. (On Mobile, click the “i” in the blue circle next “Calls.”)

Commodities are showing signs of being the new “Tech” names. What do you think?

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