Unusual Options Activity in PLTR, X stock and AAPL

October 6, 2021

Unusual Options Activity M 100621

These daily swings are violent.

This SPY wants $410-415 in the coming weeks or it’s going to swing quickly higher. I can't imagine people would think SPY $500. Just saying it feels weird.

But no one knows.

Charts in general look weak. 

But as you are witnessing, everything can turn on a dime.

This is an interesting update on a name we’ve been riding long in Winning Picks Premium.

“Jana said in an investor presentation Wednesday that the retail chain could follow the lead of Saks Fifth Avenue, whose owner spun out its e-commerce business. At a similar valuation, Macy’s online business could be worth about $14 billion.”

M stock is currently worth $6bn, and Jana is considered one of the best. 

UNUSUAL OPTIONS ACTIVITY

1. Big Contract News Doesn’t Calm the Fear

2. China Issues Causing Cracks in THIS Industry

3. This “$2, Yo!” Trade in AAPL Looks Interesting 

Let’s get started...


UNUSUAL OPTIONS ACTIVITY PLTR STOCK

Big Contract News Doesn’t Calm the Fear

Unusual Options Activity PLTR 091521

PLTR was up significantly in after-hours last night, trading above $26 on a report that they won a huge army contract

“The contract is seen as a big win for Palantir, as both it and BAE Systems were named as finalists for the CD-2 program in February of 2020. A total of six companies competed for the contract.”

Beating out 6 players to win the contract definitely says something about the company. Unfortunately, it doesn’t reduce investor fears that the government is a high percentage of PLTR’s revenue. 

The stock is trading weak and has given back all its overnight gains today.

What Does the PLTR Stock Chart Say?

PLTR Chart - Options Activity 100621

Notice that the general trading range over the last 7 months has been between $20.50 and $27.50, taking out the 2 instances where it tried to break out of this range.

The 50dma and the 200dma held today even with the big news. This is weak and shows that the bears have regained control. 

That said, the options market continues to see significant upside call options flow today looking for a bounce.

Options Activity in PLTR Stock

Unusual Options Activity Scanner PLTR 100621

The unusual options activity in PLTR is concentrated in the front two weeks. The Options Chain above shows the high options volume in the PLTR October $24 and $25 Calls. It’s been consistent all morning as the stock trends lower.  

In fact, call options outnumber put options by 3 to 1 today. So, the PLTR believers are still there but the decline in the stock on such great news is a difficult pill to swallow.

We’ve been highlighting the PLTR flows herehere and here if you want to see how it all progressed. 



UNUSUAL OPTIONS ACTIVITY X STOCK

China Issues Causing Cracks in THIS Industry

Unusual Options Activity X 100621

Steel has had an incredible run. However, Evergrande and the pressure that puts on Chinese real estate hurts the global steel story.  

The lack of positive infrastructure talk doesn’t help either.

Today, Goldman downgrades two steel names, X and NUE, saying:

“US domestic [hot-rolled coil steel] prices have averaged over $1,500/ton in 2021-to-date, >140% above the historical price levels. While part of this has been driven by strong demand and a lagging supply response, we believe the market may be anticipating a correction in the coming months as additional import volumes arrive and new capacity begin operations,”

They cut their Price Target in X down to $21 from $34. 

What Does the X Stock Chart Say?

X Chart - Options Activity 100621

X has digested a huge move from sub-$5 to over-$30 in 18 months. 

But X stock is right on a critical support level near $20.50.

It’s traded very weak ever since giving up the 50dma.

It continues to trade weak under the 200dma.

A break here could easily get the stock moving toward $15-16.

So, if there was ever a time for the big long-term holders to step in, that that time would be right now.

The options flow seems to indicate that might be the case.

Options Activity in X Stock

Unusual Options Activity Scanner X 100621

There’s Unusual Options Activity in X long-term options. It appears that someone sold out their X April 14th $18 Puts to close. They had bought these a week ago with the stock near $22.50. 

There is also a sell of 6,700 X April 14th $16 Puts. Comparing options volume vs open interest, these look like an opening sale. This means someone is willing to buy 670,000 shares at $17, and take in the $1.50 premium for that risk.

Keep in mind, Goldman claims they are not bearish the sector. They are simply saying price got too far ahead of itself on these names. 

They actually upgraded CLF stock on the back of new contract pricing with their automotive customers.



UNUSUAL OPTIONS ACTIVITY AAPL STOCK

This “$2, Yo!” Trade in AAPL Looks Interesting 

Unusual Options Activity AAPL 100621

It seems like everyone is bullish AAPL. No doubt it’s a great company.

JPM even reiterated its overweight rating going into earnings:

“While the supply ramp on the new iPhones have been slower than typical, beyond what was already a slightly delayed start of production due to issues with the camera module, the magnitude of those constraints are moderating at this time, and Apple is well positioned for a strong sales quarter in C4Q/F1Q.”

The issue is always the unknown or any surprises that can hit the stock.

Today’s EU antitrust charge is just one example of potentially bigger issues down the road.
I think the conference call will be telling. And I will be listening for “labor inflation” and “margins” talk.

What Does the AAPL Stock Chart Say?

AAPL Chart - Options Activity 100621

The stock has come down a long way already. But keep in mind, on June 1st it was near $125.

This $136 was the breakout in July, so that and the 200dma at $135 should give some near-term support to the stock. 

By the time earnings hits in a few weeks that 50dma will have come down closing the gap between the 50 and 200dma.

This set-up will make earnings a significant catalyst in the AAPL story.

Options Activity in AAPL Stock

Unusual Options Activity Scanner AAPL 100621

The weekly AAPL $139 Puts and $140 Calls are active. While these traders fight for position there, I like the AAPL November $130-120 1x2 Put Spreads for $0.35. 

This “flyer” trade is this:

Buy 1 AAPL November $130 Puts for $2.55

Sell 2 AAPL November $120 Puts at $1.10 (2 x 1.10 = $2.20)

Net total cost = $0.35.
Earnings are on 10/28th

First, this trade requires a good amount of margin.

Second, the risk is that by doing this trade one would own the stock at $110.00 + $0.35, or $110.35.

At $120 on expiration, it’s worth $10.00.

If AAPL trades up, then it will go to $0. 

This type of trade is like a “$2-Yo” on the craps table.

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Best,
Felix

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