Unusual Options Activity in NIO, AMZN stock and F

October 7, 2021

Unusual Options Activity Food prices 100721

Maybe they fix the debt-ceiling issue... Maybe not.

It’s a side-show.

What are they going to do about all of this:

“Besides rising demand (some of which has been artificially produced by massive amounts of fiscal and monetary stimulus), bad weather, and supply chain disruptions, there could be another emerging issue that may pressure food prices even higher, that is, the soaring cost of energy is sending fertilizer, a byproduct of natural gas (natural gas prices in some areas around the world are at record highs), higher which would mean crop prices will have to rise. There are also issues of greenhouses growing vegetables going dark in Europe because energy and power prices are too high.”

Remember, government problems seem like someone else’s problem. Until you can’t feed your family.

Food companies are raising prices (or lowering the weight).

People are getting hangry!

UNUSUAL OPTIONS ACTIVITY

1. Big Bet in AMZN. What Does it Mean?

2. Perfect Timing on the Goldman Upgrade. Is it Enough?

3. THIS Stock Shaking off Supply Worries

Let’s get started...


UNUSUAL OPTIONS ACTIVITY AMZN STOCK

Big Bet in AMZN. What Does it Mean?

Unusual Options Activity AMZN 100721

Cowen lowered their price target in AMZN this morning to $4300 from $4400, but they still think it’s a compelling price before the earnings report on October 28th:

“AMZN shares are +3% YTD and -2% since the 2Q21 print, following the 74% gain in ’20. We continue to like AMZN shares as the company appears to be near the tail end of a historical fulfillment and logistics investment cycle, we estimate ~$80BN in eCommerce logistics investments in ‘20/’21 vs. ~$58BN the prior 5 years combined.”

The stock is bouncing today with the overall market, but the chart looks mixed:

What Does the AMZN Stock Chart Say?

Unusual Options Activity Scanner AMZN 100721

$3200 has been a mini-support level over the last 6 months in AMZN stock. You can see it held it again this week.

AMZN stock is still under the 50dma and has stopped at the 200dma.

Bulls want to see the stock price recapture those moving averages before getting too excited.

The real support line is that $2900 we see going back to July of last year.

There is also a small downtrend since the highs a few months ago.

But there's some unusual options activity in AMZN Calls that suggests the stock is about to make a big move. Or does it?

Options Activity in AMZN Stock

Unusual Options Activity Scanner AMZN 100721

The options flows suggest a large investors stepped in to buy 12,000 AMZN  October 22nd $3500 – 3550 Call Spreads for approximately $4.50.

Comparing the options volume vs open interest, you’ll notice the Open Interest in the 3500 Calls are 11,410. This suggests it is a closing trade.

I looked into the historical data and verified that these options have been sold over the last couple of weeks.

It’s likely they are long the stock and simply rolling up their strikes to take in the premium. So, they are bullish on AMZN, just not that bullish.



UNUSUAL OPTIONS ACTIVITY NIO STOCK

Perfect Timing on the Goldman Upgrade. Is it Enough?

Unusual Options Activity NIO 100721

Goldman Sachs upgraded NIO to a buy with a $56 12-month Price Target:

“We believe Nio’s positioning of the ET7 is strategic. The price point makes ET7 China’s most expensive car model ever launched by domestic manufacturers, strengthening Nio’s brand equity in the premium space.”

They compare the ET7 with the Mercedes S-Class and the BMW 7 Series with a lower price point.

The stock likes the news.

What Does the NIO Stock Chart Say?

Unusual Options Activity Scanner NIO 100721

I’ve been pointing to that $32 for a while. It’s the line in the sand for the long-term shareholders. So, Goldman’s report came right in time.

Like many stocks, the last month has done some technical damage.

NIO is still under the 50 and 200 dma.

The good news is that it’s holding a very large bull flag formation.

If the market holds and China plays nice, a breakthrough above that trending top line would be very bullish. It just may take a little bit of time.

Options Activity in NIO Stock

Unusual Options Activity Scanner NIO 100721

With something to finally cheer about, the weekly options exploded with high option volumes.

You can see the options flow in next week’s expiration is concentrated in the $35 to $37 Calls.

The Risk-Reward Breakeven Prices are in the $38-39 range, which means the buyers are looking for another 10% move higher.

All the Chinese stocks are trading better today. Did something change or is this a dead cat bounce???



UNUSUAL OPTIONS ACTIVITY F STOCK

THIS Stock Shaking off Supply Worries

Unusual Options Activity F 100721

Yesterday, I mentioned GM so why not F today.

The only real news I see are reports that F was selling some manufacturing assets in India.

“Ford Company has made a decision to stop all manufacturing operations in India; this may be the result of a proposed joint venture with Mahindra that had fell through early this year. After following this, the company has decided to wind down its manufacturing process in the nation and cut its operating losses which stood at more than 2 billion over the past 10 years.”

Good management knows when to cut losses. The market seems to think they'll get a good price. The stock looks strong.

What Does the F Stock Chart Say?

Unusual Options Activity Scanner F 100721

F stock spent 4 months digesting the huge spike in May.

It’s held the $12.50 level several times over that period.

Since the highs in June, the 50dma and 200dma have converged nicely and continue to trend higher.

Today’s options flow has a message: What Supply shortage?

Options Activity in F Stock

Unusual Options Activity Scanner F 100721

A large buyer stepped in to buy 15,000 F October 29th $15.50 Calls for $0.35. The Risk-Reward Breakeven Price is $16.60, which matches the high on the stock.

These options are targeting earnings on October 27th.

Keep in mind, the Rivian IPO is due by year end. F owns a good chunk of Rivian, which will draw a lot of attention going into the event.

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Best,
Felix

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