Unusual Options Activity in MU, JPM stock and MGM

October 12, 2021

Unusual Options Activity China Media 101221

How long before these headlines blatantly say Apple iPhones are banned in China?

If you want to trade options, these are the types of questions you need to ask.

The follow up question are:

Where would the stock trade?

How likely is that to happen?

Do the options have that priced in?


1. THIS Semi Stock is Breaking Down

2. Was this JPM Breakout Real?

3. Big Week Coming Up for Online Gaming Stocks

Find your own ideas with the Unusual Options Activity Scanner

Let’s get started...


THIS Semi Stock is Breaking Down

Unusual Options Activity MU 101221

The chip shortage is taking its toll on the sector here. 

This article highlights correcting DRAM and NAND prices.  

I’ve been watching MU for the last two months wondering how it would handle this $70 level:

What Does the MU Stock Chart Say?

MU Chart - Options Activity 101221

MU stock is breaking down today.

$68-70 was support in December last year and again in August.

There is strong support at $50. $60-62 might also give you some support as it was the pre-Covid levels that you see on the chart.

MU has been following the 50dma all the way down here since May.

The bulls need a lot of help before the avalanche of sellers above $70 bail on the stock.

The options flow is on par with what you see on the chart.

Options Activity in MU Stock

Unusual Options Activity Scanner MU 101221

Puts vs Call options are at 2 to 1 as investors start managing that risk through the break. There’s unusual options activity in MU November expiration.

When comparing option volumes vs open interest, it appears that someone is rolling down their $75 Puts to the $72.50 and $70 Puts. The November $65 Puts are also active.

The Risk Reward Breakeven Prices are pointing to the low-$60s, and even the upper $50s. This matches what we are seeing on the charts.

Chips are in almost every part of our lives.

MU = chips = the economy.


Was this JPM Breakout Real?

Unusual Options Activity JPM 092721

Analysts are high on the banks for several reasons:

  • Loan growth should show some improvement.
  • Higher long-term interest rates help their NIM.
  • They have record cash on their balance sheets.

From an investor standpoint, I would also add they are not as close to the China problems as other industries.

As bank earnings are due to be announced this week, JPM is pulling back into the report.

What Does the JPM Stock Chart Say?

JPM Chart - Options Activity 101221

From a two-year perspective this chart still looks great.

The concern is that we saw a false breakout here over the last 2 weeks that got the shorts out of the way. The volume wasn’t confirming a major breakout.

This week’s earnings report will give us a lot more information.

A good report should establish a breakout.

A bad earnings report could knock the stock back near the 50dma at $159 and then $152 on a disaster.

Options Activity in JPM Stock

Unusual Options Activity Scanner JPM 101221

There has been call buying in JPM over last couple of weeks. In particular, we saw substantial call buying in the November 19th 180 Calls.

Today, there’s a seller of 10,000 JPM December 17th $180 Calls at $1.90.

After seeing today’s flow, I suspect that the November Call options from a few weeks ago was someone paring down their stock position and managing the risk-reward.

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Big Week Coming Up For Online Gaming Stocks

Unusual Options Activity MGM 100521

We spoke about MGM last week.

Today, Credit Suisse upgraded the stock to outperform:

“We are upgrading MGM from Neutral to Outperform and raising our target price to $68. MGM has gone through a transformation, recently announcing four transactions, and we believe the market is not giving full credit. Pro forma, we see three drivers of upside: a cleaner more simplified organization with a more attractive capital structure, upside to numbers and improving sentiment.”

Keep in mind, MGM is in a battle with DKNG over Entain and a decision by DKNG is due over the next fews days.

Citi initiated DKNG with a buy yesterday.

Today, Roth disagrees and initiates PENN as a buy and DKNG as a Sell.

“We also believe investors are overlooking Penn’s opportunity to cross-sell online gaming to its 20M+ legacy casino loyalty members. … We don’t believe DraftKings’ 20-25% market share is sustainable as mid-tier peers ramp customer acquisition and better cross-sell land-based databases. While we believe an industry-leading product creates some market share advantages, we see advantages from Daily Fantasy Sports fading over time and DraftKings losing market share, particularly in iGaming.”

Net-net, there is a lot at play here in the online gambling space going into next week. Here’s MGM stock:

What Does the MGM Stock Chart Say?

JPM Chart - Options Activity 101221

MGM stock looks like a breakout today. It has broken the $46 level on strong volume.

That makes a $56 print possible. The range over the last 6 months was around $10 range, $36-$46. So, add $10 to $46 and you get $56.

The option flows today are playing just that.

Options Activity in MGM Stock

Unusual Options Activity Scanner MGM 101221

There’s unusual options activity aiming at earnings. A buyer stepped in to buy 15,000 MGM October 29th $47 -53 Call Spread for $1.72. That’s $1.72 to make $4.28, or ~250%.

Earnings are expected on the 28th. But I think the Draftkings’ announcement will be equally important.

Stay tuned.

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