Unusual Options Activity in MU stock, CTXS stock and TGT

December 21, 2021

Unusual Options Activity Megaphone 122121

If you're bullish, then you might love this.

The above picture is the SPX Cash chart derived from the futures. So, it’s a 24 hour chart.

All I did was connect the dots on the highs and the lows.

This is called a Megaphone formation.

Megaphone moves are unbelievable and sometimes look “impossible.”

If I taught you anything, “impossible” still has some % chance in the stock market.

Sometimes a lot more than you might think.

And that’s where the opportunity is!

“Impossible” here is new highs – Soon!

What do you think?


1. MU Earnings Came With One Very Bullish Word

2. Big Put Seller in THIS Top Retailer

3. Software Name in Play. Do the Options Believe It?

Find your own ideas with the Unusual Options Activity Scanner

Let’s get started...


MU Earnings Came With One Very Bullish Word

Unusual Options Activity MU 101221

A positive earnings report out of MU last night has semiconductor stocks higher today. One of the important comments out of the earnings release was when CEO Sanjay Mehrotra mentioned that the chip shortage was “easing.”

This has significant ramifications to the overall market and is a bullish sign indicating that the worst may be behind us.

The MU chart, which only 2 months ago looked disastrous, now looks like it wants new highs.

What Does the MU Stock Chart Say?

MU Chart - Options Activity 122121

From April until early-November MU stock was having trouble under the 50dma. Once it broke through and held, the stock has been very strong.

During the last 4 weeks, MU stock digested the quick move off the lows and is now looking to get back to the highs.

The 50dma is also looking to cross the 200dma on the upside.

The stock should see some resistance at the $97 high.

The Bears might get busy on a move below $87.50 again, as that would indicate a false breakout here.

Options Activity in MU Stock

Unusual Options Activity Scanner MU 122121

There’s unusual options activity in MU front-week options. More than 60k MU December 23rd $90 Calls have traded. Buyers came in right at the open and have since peeled some off.

Interestingly, yesterday’s $82 Straddle went out at $7. Using 1.25, we get an upside target of $90.75. MU stock high price near the open was $90.25. (Using the same calculation, NKE came quite close as well. Take a look.)

You can see the IV Crush hit the MU options today after the release of earnings. Implied Volatilities are down 13 points in January and almost 5pts in April. This is letting out some of the air in the premiums. If you want to better understand IV Crush and learn how to avoid it then check out my article: What is IV Crush?

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Big Put Seller in THIS Top Retailer

TGT stock has been a monster over the last 18 months. The company’s omnichannel has performed incredibly well and customers love the service.

Their earnings reflect this positivity as the company’s last report beat earnings and sales expectations. Even better, the company is actively buying back their stock at these levels.

So, why doesn’t the chart look good?

What Does the TGT Stock Chart Say?

TGT Chart - Options Activity 122121

Yes, the stock is having some trouble up here. But if you pull back the curtain and take in the full picture, it looks like this could simply be a digesting period.

That said, the stock is firmly below the 50 and 200dma.

TGT is also below the October low, which clouds whether that would be the low range of this digestion period.

The Bears will lean on the $225-$230 range slowing down any move higher. And if they can hold TGT here for another month, then the 50dma will look to cross the 200dma. In essence, those moving averages might start rolling over.

The Bulls want a positive move into January and really need to recapture that 50dma.

That would set up a move to the highs on the next earnings report.

Options Activity in TGT Stock

Unusual Options Activity Scanner TGT 122121

Someone thinks this decline in TGT stock is too much. And while they may not be willing to add to their position right here, they have decided to sell TGT Put options to take in some premium.

A seller sold 10,000 TGT January 21st $200 Puts at $1.88, collecting $1.88 million dollars. He takes the risk of buying 1mm shares at $200 if the stock is below that level at expiration.

That’s a $200mm stock position, which narrows the number of funds that would do that trade. My guess is Blackrock, which means they will probably be buyers of stock into $200 as well.

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Software Name in Play. Do the Options Believe It?

Unusual Options Activity CTXS 122121

There was a Bloomberg article indicating that Elliott Management and Vista Equity Partners are considering a joint bid for CTXS.

Elliott Management recently got back into CTXS with a 10% stake in the company. This was the second time they entered the stock, after scoring big on the first go around.

This CNBC article does a good job summarizing Elliott’s history with CTXS.

One look at the chart and you can see why Elliott might see opportunity again.

What Does the CTXS Stock Chart Say?

CTXS Chart - Options Activity 122121

CTXS stock has been cut in half and almost back to where Elliott got in the first time.

The stock is clearly in a downtrend and has been struggling under the 50dma for some time.

The drop below $110 brought out the sellers in August. Elliott announced a $1Bn position in CTXS on September 7th.

While the chart looks a bit unhealthy, technical analysis doesn’t matter much when there is a potential bid at play.

CTXS is up 12% today indicating some belief in the article.

But do the options believe the story?

Options Activity in CTXS Stock

Unusual Options Activity Scanner CTXS 122121

CTXS options are surprisingly rather quiet. The main trade being done out there is a 1x2 Call  Spread in January. The buyer is buying the CTXS January 21st $100 Calls and selling two of the $115 Calls for ~$1.50.

This would indicate a bid of around $115 for the company.

In addition, there was a put seller of the 1,000 CTXS January 21st $92.50 Puts at $3.15.

These are small trades but given the news out today, I would keep an eye on the CTXS options activity going forward. These workspace stocks are worth more in the WFH environment that is starting to look more permanent each day.

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