Unusual Options Activity in PYPL, TLRY stock and LCID

October 21, 2021

Unusual Options Activity Evergrande 102121

Just because it doesn’t make headlines anymore...

The China real estate story is still there.

Higher stock prices tend to lower our guard.

Be careful.

UNUSUAL OPTIONS ACTIVITY

1. Have They Punished PYPL Enough?

2. Marijuana Trying to Gain Some Traction

3. With TSLA Roaring, Who’s Next?

Find your own ideas with the Unusual Options Activity Scanner

Let’s get started...


UNUSUAL OPTIONS ACTIVITY PYPL STOCK

Have They Punished PYPL Enough?

Unusual Options Activity PYPL 102121

Bloomberg announce the PYPL talks with PINS yesterday. Wall Street is giving the news some credibility as PYPL is getting hit, PINS is up, and PINS term skew is reflecting a takeout

The chart doesn’t look pretty today:

What Does the PYPL Stock Chart Say?

PYPL Chart - Options Activity 102121

PYPL stock was already losing some steam going into yesterday’s news. After trading $310 at the end of July, it was down 20% through September before bouncing back through the 200dma and touching the 50dma.

The takeout news sent the stock reeling. 

It’s off 10% since yesterday as Wall Street digests what the new company might become.

On the downside, there seems to be good support near $230.

Options are busy today.

Options Activity in PYPL Stock

Unusual Options Activity Scanner PYPL 102121

There's unusual options activity in PYPL front week Call options this morning. The PYPL October 22nd $250 Calls traded 27,000 times looking for a bounce. There’s similar activity taking place going out through December.

With the stock trading off, it looks like the big guys are replacing stock with options until they can better understand the outcome.

My 2 cents here…

PYPL probably got a good look at PINS numbers and knows that they won’t meet expectations, hence the “low” bid for a premium social media company.

PINS leaked the story to try to get others at the table or press PYPL to pay up a little more. This is always risky because it could alienate the PYPL team. And worse, what if no one bites and comes to the table?

In fact, to avoid a bidding war, other players might step in only after they see PINS willingness to sell. Remember that MSFT offered them more in February and PINS management declined.
If a deal were to happen, I suspect we hear about it on Monday morning at $70-75, as I don’t think PINS wants to report numbers without a deal.

I think the Street will come to like the deal at $70 as PYPL explains their vision. PYPL already lost 10%, or $30bn, which is most, if not all, of the “fluff” in PINS. 

If no deal, PYPL likely bounces hard.


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UNUSUAL OPTIONS ACTIVITY TLRY STOCK

Marijuana Trying to Gain Some Traction

Unusual Options Activity TLRY 102121

I saw the Marijuana names pop up on the Unusual Options Activity Scanner in the last few days.It looks like call buyers were getting in front of a Las Vegas conference:

“Speaking at MJBizCon 2021 in Las Vegas, company CEO Chris Walsh predicted that whatever happens in Congress, 2022 will see at least four more states flip to recreational marijuana legalization -- and perhaps as many as seven.
The contenders, in Walsh's view, are Arkansas, Maryland, Missouri, North and South Dakota, Ohio, and Oklahoma. Additionally, Walsh points out that Idaho and Nebraska are in line to legalize marijuana for medicinal purposes. And as marijuana sales become legal in more and more places, Walsh predicts that U.S. sales of the drug will roughly double (or more) by 2025, running anywhere from $38.4 billion to $45.9 billion.”  

 Here's a chart to put things in perspective.

What Does the TLRY Stock Chart Say?

TLRY Chart - Options Activity 102121

TLRY stock has made two very large runs over the last few years. The most recent was in February. There have been a dozen attempts to re-charge higher since then that have all failed.
Here we are bouncing off $10. Is this the beginning of a new “mountain”?

Not sure. But, the conversation has to start with TLRY stock retaking that 50dma first.

Options Activity in TLRY Stock

Unusual Options Activity Scanner TLRY 102121

That said, the TLRY options volumes have increased with Calls trading 7 to 1 vs Put options. While front week options are bid looking to catch a potential quick move, I like to point out that the owner of those TLRY December $20 Calls thinks today is a good moment to get out. 

I offered a Call Spread idea (instead of stock) the last time with the stock pushing $20 that would have saved anyone interested some money. 

Here goes again.

I like the TLRY January 2023 $17-37 Call Spreads for $1.40. Max profits are $18.60, or 13.25 to 1. It’s either going to work or it’s not. And you can save yourself a lot of anxiety trading it up and down, up and down, up and down, for the next 6 months.

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UNUSUAL OPTIONS ACTIVITY LCID STOCK

With TSLA Roaring, Who’s Next?

Unusual Options Activity LCID 102121

When the lead horse goes up, the pack will follow. TSLA is on a rampage and giving hope to all other EV names. 

LCID is trying to start off as a high-end car in EV and then produce cars for the masses. It’s got tremendous backing with Michael Klein and the Saudis. Some call it "The Next Tesla."

Can the stock get back to where it was?

What Does the LCID Stock Chart Say?

LCID Chart - Options Activity 102121

LCID stock is right in the middle of the $17.50 - $30 range it has established after coming down that “mountain.” 

There was good volume in September to lift it from the low-end of the range back through the 50 and 200dma. It continues to hold.

I don’t see much to get excited about there, but the options are active.

Options Activity in LCID Stock

Unusual Options Activity Scanner LCID 102121

LCID Calls are trading 5x the Puts today and there’s unusual options activity in LCID front two-week options. 

Tomorrow’s $25 calls have traded over 60,000 times. But next week’s calls look more interesting only because they give you a little more time. The LCID October 29th $25 Calls and the $26 Calls are getting picked up.

The Risk Reward Breakeven Prices in the next week Calls range near $27-$28. This means buyers are looking closer to $27.5-$29, which gets us close to the top of the trading range.

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

Now go make some money!

Best,
Felix

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