Unusual Options Activity in NKE, IGT and TSLA

September 23, 2021

Unusual Options Activity SPY buy sell 092321

When you trade options, you must ALWAYS consider the "impossible."

4 days ago the "impossible" would have been SPY = 500 by year end.

Some people still might say that's "impossible."

Keep in mind, it's only ~12% higher.

Today's market bid is strong.

The 50dma has been recaptured. 

The all-time high is now only 2% away.

The market has done an incredible job at climbing this wall of worry.

Remember, the heights seen in the Nasdaq 2000 bubble also seemed impossible.

Your homework is to look at the final 3 months of that bubble.

Nothing in the market is "impossible."

Give every outcome some weight.

In fact, when everyone is sure that it's impossible... it become probable!

UNUSUAL OPTIONS ACTIVITY

1. High Expectations for THIS Gaming Stock 

2. BIG Downside Options Flow in TSLA Explained

3. THIS Trade Tells You the NKE Target for Tomorrow

Let’s get started...


UNUSUAL OPTIONS ACTIVITY IGT STOCK

High Expectations for THIS Gaming Stock 

Wheel of fortune

I showed you the IGT call spread last month, where the buyer was rolling up his November $19-23 Call Spreads to the $21-26 Call Spreads. He then switched things around in September.  

Take a look at the chart:

What Does the IGT Stock Chart Say?

IGT Chart - Options Activity 092321

The stock made a significant move higher today on a Credit Suisse Price Target increase noting improving sentiment in the name. 

IGT is quite volatile between the range of $17 and $27, racing up and down twice in 4 months.

After recapturing the 50dma, the stock has traded very well. I suspect it should see some resistance at $27, before breaking higher.

Earnings are in November. 

Options Activity in IGT Stock

Unusual Options Activity Scanner IGT 092321

The IGT option flows are dominated by a couple of call spreads being adjusted today.

Specifically, the IGT November $23-$30 Call Spread is being sold 15,000x to close at $2.36. The seller is taking most of that premium and reinvesting the money into 20,000 IGT November $26-$33 Call Spreads for $1.38. 

While he has taken some money off the table, it’s clear that he is looking for a significant move higher and a break of that $27 level on earnings.


UNUSUAL OPTIONS ACTIVITY TSLA STOCK

BIG Downside Options Flow in TSLA Explained

Unusual Options Activity TSLA 092321

The news flow in TSLA stock has been positive. Today, Reuters mentioned a possible next-gen chip deal with Samsung. 

It’s also comforting to hear that Cathie Woods won’t sell TSLA stock unless it hits $3,000 within the year. 

The stock is trying it’s best to make that happen.

What Does the TSLA Stock Chart Say?

TSLA Chart - Options Activity 092321

While I was vocal about TSLA stock possibly breaking $500 back in March and May, I switched my tune in early June-July as the stock recaptured its 50 and 200dma.

Since then, TSLA stock has been trading well, holding the uptrend pattern.

This $760 level is showing some resistance but it’s the $780 level that you should watch.

A break above that level and the old highs inTSLA stock come back into play.

For the bears, you want a <$700 print with volume, which brings me to the option flows today.

Options Activity in TSLA Stock

Unusual Options Activity Scanner TSLA 092321

There’s significant unusual options activity in TSLA today on the Put side. 

First, there was a buyer of over 25k TSLA October 1st $710 Puts for about $7.00.

About 1 hour later, it appears that a Put spread came in where they sold 25,000 TSLA October 8th $720 Puts at about $12.50 and bought 50,000 TSLA October 1st $700 Puts for around $6.00.

Usually, this 1x2 trade would be done the other way… Buy 1 put, sell 2 lower puts. And that would make more sense with the earlier trade.

Anyways, the size of the trades makes me believe it was the same person.

If this is a directional trade, then it wins with a larger move to the downside.

If it’s a volatility trader, they may be looking to protect a short gamma position with this trade.

Net-net, let’s keep an eye on this one.


UNUSUAL OPTIONS ACTIVITY NKE STOCK

THIS Trade Tells You the NKE Target for Tomorrow

Unusual Options Activity NKE 092321

After blowing out earnings last quarter, Nike is reporting again after the bell. Their issues have been widely public… Supply-chain issues with their Vietnam factories and China exposure.

Check out the chart:

What Does the NKE Stock Chart Say?

NKE Chart - Options Activity 092321

After hitting the $174 high, NKE stock declined right back to that opening print on the last earnings date. Keep in mind, 47 million shares traded that day with NKE stock up almost $20.

Usually, those buyers step up to protect their purchase.

And they did.

The stock has made a quick bounce into earnings. 

The main issue I see is the differential between the 50 and 200dma. It’s quite large and likely needs to converge over the next few months, which means NKE stock has to digest the larger move from $132 to $174.

Options Activity in NKE Stock

Unusual Options Activity Scanner NKE 092321

The option flows ahead of the print are mixed. There is 1 interesting trade I see that is playing for a move higher.

Someone bought the NKE $165 Calls and the $175 Calls 5,000x, then sold 10,000 NKE $170 Calls. Net-net they paid approximately $0.65. This trade is called a Call butterfly.

The max payout on this strategy is $5 if the stock closes on Friday at $170.

In the podcast, I had been showing you the “1x2s” – buy 1 sell 2. That took on all the risk if it had a huge move outside of the further OTM option. With the butterfly, you are buying the way, way further OTM options to close the risk higher.

So, this person doesn’t want to get hurt if NKE says everything is ok and the stock breaks through the highs again.

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Best,
Felix

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