Unusual Options Activity in NVDA, TGT stock and AUPH

November 18, 2021

I'll be doing a webinar on Monday with some friends.

I plan on showing you how to analyze the Unusual Options Activity using historical data.

This is really important information for anyone looking at UOA to fully understand. It's also information that (surprise) no one else is talking about.

As always I guarantee that you'll learn something.

Remember,  the UOA game is not about chasing every option that trades.

It’s about understanding what you’re looking for, why it’s important, and what might the opportunity be.

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I'll be sending you more detailed information very soon. Stay tuned.

UNUSUAL OPTIONS ACTIVITY

1. Every Rumor has a Bit of Truth

2. Is TGT Making the Right Decision?

3. NVDA Adds Another Compelling Storyline!

Find your own ideas with the Unusual Options Activity Scanner

Let’s get started...


UNUSUAL OPTIONS ACTIVITY === STOCK

Every Rumor has a Bit of Truth

Unusual Options Activity AUPH 111821

At the BMY investor conference on Tuesday, CEO Giovanni Caforio said:

“The company is also looking at small and mid-size bolt-on deals to add to its stable of potential new products.”

In October, AUPH jumped on a Bloomberg report that BMY might be interested in acquiring he company.

What Does the AUPH Stock Chart Say?

AUPH Chart - Options Activity 111821

Interesting chart.

It’s a biotech name with a rumor, so anything can happen.

The Bulls have to be happy that the stock held the big move higher last month. As the MACD comes down, the holding pattern would give it some strength to get back to those highs.

The Bears will simply say: “It was just a well-placed article that has no merit.”

I used to trade the biotech options at Bank of America, so I will tell you that the options market usually has a good read on the story.

Options Activity in AUPH Stock

Unusual Options Activity Scanner AUPH 111821

Call activity has been heavy this week in AUPH as the company is presenting at a Jefferies Conference today and tomorrow. The Call buyers have targeted the $25, $30, and $35 Calls in November through January options.

You can see the IV is up ahead of their presentation and the “3M Sentiment” is Bullish.

Here’s my two cents: BMY did not deny the rumor.


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UNUSUAL OPTIONS ACTIVITY TGT STOCK

Is TGT Making the Right Decision?

The big story that will play out over the next few months in retail is whether or not WMT and TGT’s view on pricing will help them attract more customers.

These 2 are not raising prices like other retailers due to the inflationary pressures around us. That means they’re going to eat the inflationary cost, which should hurt gross margins. But it also means that more people might buy at their stores.

Makes sense to me.

The market didn’t like the news from either company and sold their stocks.
This morning, the Bank of America analyst defended TGT and reiterated his buy rating He also upped his price target to $329. He thinks Gross Margins will hold up better than some expect.

“While we expect y/y [gross margin] pressure to persist in [fiscal fourth quarter] and [fiscal 2023 first half], [selling, general and administrative expense] improvement should serve as an offset given leverage from TGT’s [fourth-quarter sales growth expectations] and the potential roll-off of a portion of LY’s COVID-19 expenses. GM & sales should also see support from favorable sales mix.”

How would you play it if you were them?

What Does the TGT Stock Chart Say?

TGT Chart - Options Activity 111821

After almost a straight shot from $165 to $265, TGT stock decided to take a breather.

It ultimately found support at around $222, then right back up to make new highs.
Yes, that’s what strong stocks do.

The Bulls want to hold the 50dma creeping up and see TGT take another crack at that high.

On the other hand, the Bears are going to point to that failure at the highs and lean on it. They will also point to a bit of a MACD diversion in the last few weeks to confirm their opinion.

I suspect this digestion period within the $222 -$265 range could use a few months.

Options Activity in TGT Stock

Unusual Options Activity Scanner TGT 111821

The price drop after earnings yesterday had many Call buyers trying to catch the dip. There was an IV Crush, however, the demand held IV up from getting crushed even further.

>>> What is IV Crush?

While the options flow is somewhat muted today as more Call sellers come into the name (likely selling long Calls), I wanted to show you how the IV Crush can last for more than 1 day. You can see the TGT Implied Volatilities drop across all expirations as they try to find that balance.

With the company a buyer of $2bn shares in the last quarter (avg price maybe $245) and a fail at $265, TGT might not get the volatility needed to make money in the options.

So, options may need a break until the stock gets to the edges of its range and/or we get closer to the earnings date.

This is a good developing story to watch.

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UNUSUAL OPTIONS ACTIVITY NVDA STOCK

NVDA Adds Another Compelling Storyline!

First it was Meta’s big announcement and then the back-to-back RBLX earnings/investor day that has fired up the “Metaverse” chatter.

Don’t forget… something’s gotta power this new world.

I took this clip from the WSJ talking about AMD vs NVDA:

“AMD said last week that Meta is a new customer for its Epyc server processors. And Chris Caso of Raymond James estimates that about $5 billion to $9 billion of Meta’s additional capital spending will go toward artificial intelligence, ‘or which Nvidia is likely to be the largest beneficiary.’”

Then NVDA’s CFO mentions this following a blockbuster earnings:

“More customers are seeking out Nvidia’s chips for artificial intelligence applications like understanding human speech.”

The Metaverse will be about communicating through avatars on the screen. AI language chips will be a must for the Metaverse to succeed.

So, is NVDA run just getting started?

What Does the NVDA Stock Chart Say?

NVDA Chart - Options Activity 111821

If you go back another year from this chart, then you’ll see that NVDA stock is on an exponential ride.

Where does it stop? No one knows.

It is a very strong chart with very strong fundamentals and now a long runway with a new “metaverse” story.

The Bulls are excited, as they should be.

In the near-term, the Bears will want a close below the highs. But for them to really get involved, that $290 level must be broken. Otherwise, the bears will find another stock to go beat up on.

This is the left side of what may be a very large “Mountain.” You just don’t short a stock going up exponentially.

Until it shows some weakness.

And then you still must be very careful!

Options Activity in NVDA Stock

Unusual Options Activity Scanner NVDA 111821

There’s unusual options activity in NVDA front-week options after the earnings. Buyers came in for the $320, $325, and $330 Calls this morning. More than 600,000 options have changed hands.

On a Thursday before expiration, the day after Earnings, and facing the IV Crush… 

Geez! This is a tough way to buy options.

The P/L will be lightning fast in both directions, although by day’s end it becomes more likely that the market makers take control and squeeze the premiums dry for tomorrow.

Click here if you need more options trading picks with in-depth analysis.

Now go make some money!

Best,
Felix

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