Unusual Options Activity in PLTR stock, TSLA and LVS

January 10, 2022

Unusual Options Activity SPY 010621

A good lesson for anyone involved in the fantasy stocks is to understand how low these stocks can go.

Just go look at how low the 1999 tech names went when the bubble burst.

Then go look at how low stocks fell in 2009.

The worst part about the fall is that there are massive bounces in between, which builds confidence to hold.

And yes, “everyone” is a long-term holder until they are facing 70-80-90% losses.

Then they sell.

Almost everyone.

Almost every time.

Maybe this time is different.

Just be careful with them.

In the meantime, I played a little "connect the dots" with the SPY chart (See chart above) and that's what I got.

Here are todays TOP3...

UNUSUAL OPTIONS ACTIVITY

1. TSLA Options Have a Message For You

2. PLTR is a Better Buy at THIS Level

3. Binary Event Coming for LVS

Let’s get started...


UNUSUAL OPTIONS ACTIVITY TSLA STOCK

TSLA Options Have a Message For You

Unusual Options Activity TSLA 093021

Goldman Sachs named TSLA as one of their Top Picks for the new year and raised its target to $1,200.

“We believe that Tesla, given its leadership position in EVs (including its vertical integration and tight coupling of hardware and software, as well as its ecosystem of charging stations and brand), and its focus on clean transportation more broadly (given its solar and storage businesses) will be best positioned to capitalize on the long-term shift to EVs.”

The problem is that $1,200 doesn’t feel too bullish.

What Does the TSLA Stock Chart Say?

TSLA Chart - Options Activity 011022

TSLA stock is coming off a huge 6-month move from mid-May to November, where it went from $550 to $1250. It seems to be having some trouble staying above $1200.

Keep in mind, stocks don’t go to infinity overnight. Not even TSLA.

TSLA stock is firmly above the 200dma but below the 50dma. $900 remains support.

I suspect the stock needs to digest the latest move, which means it is more likely that you see a range bound trade for the next 3-6 months.

By then, the distance between the 50dma and 200dm would tighten and give the stock some strength to make another move higher.

Options Activity in TSLA Stock

Unusual Options Activity Scanner TSLA 011022

The weekly TSLA options are all over the place. The TSLA January $1,000 Puts were well bid in the morning, but the attention quickly drifted back to the TSLA January $1,050 calls.

Net-net it appears that all premiums are lower than their average purchase price.

Earnings are expected near January 26th.

I looked at the TSLA January 28th $1030 straddle (with the stock $1,028.). The price was ~$131. This implies TSLA will land between $865 - $1,195 on January 28th... 68% of the time.

That matches up well with our chart range, which means the market is forcing you to catch the next breakout or breakdown to make any money. Not the easiest task.


Pick the Right Option

UNUSUAL OPTIONS ACTIVITY PLTR STOCK

PLTR is a Better Buy at THIS Level

Unusual Options Activity PLTR 091521

We talked about the pressure PLTR was under just a few weeks ago. The stock was $19. I was concerned with how it was trading near the lower end of its range.

“The longer it stays “flat” at the lower edge, the more likely it is to break lower on any weakness in the market. Essentially, this “flat” move in December emboldens the Bears.
A break of $17 and the wheels could come off.”

The wheels have come off.

What Does the PLTR Stock Chart Say?

PLTR Chart - Options Activity 011022

PLTR stock is breaking down.

Unfortunately, just from looking at the large volume days in the above chart, you can see that there are millions of investors “stuck” holding the stock at higher prices.

The stock is firmly under the 50dma and the 200dma, and under this key $17 level we’ve discussed in the past.
This type of chart gets the bears excited.
First, the volume is not that high relative to all the other big volume days.

This can mean a couple of things:

  • Bullish because the holders are long-term and won’t sell.
  • Bearish because the holders think they are long-term and will puke it much lower.

Either way, the Bears are going to lean on that $17 level and likely target $10.

The longer the stock stays under $17, the worst it will get for the Bulls.

Options Activity in PLTR Stock

Unusual Options Activity Scanner PLTR 011022

Option volumes between Calls and Puts are trading evenly, which by itself is something new.

As always, the buy the dip options crowd is in there supporting the stock today.

But there is activity in the March worth looking at. A buyer stepped in to buy 8,000 PLTR March 18th $16 Puts for ~$2.00. The RR$ is $12.56, which likely makes the target stock price $11.50-$12.00.

Earnings are due in late-February.

My two cents is simple…

PLTR gets most of its revenues from the government right now.

Most of their growth is from selling to corporations.

For the stock to climb, it needs to continue growing revenues at +30%.

Their upcoming earnings needs to show that they are winning clients at a fast clip.

They cannot lose a government contract right now because it would look bad.

Any bad news will get the bears pressing holders already carrying huge losses.

The stock was $10 only last year.

Don’t kid yourself…

This could easily get back to $10 and lower just because of supply and demand.

That said, you can't just give up on a stock that just got pounded 40% lower in 8 weeks. But I’d rather buy the stock above $17 for a trade


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UNUSUAL OPTIONS ACTIVITY LVS STOCK

Binary Event Coming for LVS

Macau

If there is one stock that has been patiently waiting for this Covid pandemic to fade away, it’s been LVS.

They sold off their Vegas properties to focus on the Far East, specifically Macau.

Unfortunately, China’s Zero-Covid policy is not helping their cause.

Investors have been patient as well, but for how much longer?

There’s been some buzz that China will open things up after the Olympics. They are keeping everything on lockdown, so the world sees strength (i.e. very low Covid cases) when watching the TV.  

For LVS, let’s hope things open up. Soon!

What Does the LVS Stock Chart Say?

LVS Chart - Options Activity 011022

LVS is hanging on by a thread here near the lows of March 2020.

Even worse, it’s been drawing in buyers who think China will open after the Olympics.

The stock is having trouble getting above and holding the 50dma.

It’s firmly below the 200dma and in a steep downtrend, giving the Bears firm control.

$34 is a big support level.

This is increasingly becoming a binary situation... China opens after the Olympics or not.

If they do, then you can see a run towards $50 by spring-early summer. If not, mid-$20s are not out of the question.

Options Activity in LVS Stock

Unusual Options Activity Scanner LVS 011022

With this perceived “event” of China opening their borders, there continues to be significant Call option activity in LVS.

It looks like someone adjusted their position this morning. They sold 15,000 LVS March 18th $40 Calls to close and bought 15,000 LVS March 18th $36-$43 Call Spreads to open. This essentially rolled down their strikes from $40 to $36 and capped their gains at $43.

Keep in mind, if China doesn’t open then LVS has to do something.

They have no real business without Macau.

This might force them into the online sports betting market. Watch out for that.

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Best,
Felix

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