Unusual Options Activity in RBLX, PLTR stock and GE

November 9, 2021

Unusual Options Activity TLT 110921

Inflation is here. Bonds are bid.

Wait, what???

Interest rates are supposed to be going up, pushing bond prices down.

So what’s going on?

Is there really long-term inflation? Is it “transitory”?

All good questions.

Remember, sometimes the market’s movement doesn’t match the news or what we can see.

The only thing that moves stocks or the market is supply and demand.

It appears that the banks have a ridiculous amount of money that needs to be put somewhere, which makes them a BIG buyer of bonds... “Hundreds-of-Billions-of-dollars” buyer of bonds.

Why?

They have very little loan growth, and consumers are I bit more into saving these days.

Does that mean no inflation?

I think there’s a lot of inflation in the pipeline.

The world may think there is a lot of inflation in the pipeline.

But if there are more buyers of bonds than sellers of bonds, bonds go up… even when they should probably get killed.

Watch these banks. I mentioned they were trying to turn last week.

Long-term interest rates are moving lower, while the market is starting to push the near-term rates higher because they think Powell is asleep at the wheel.

A flat yield curve is no good for the banks.

UNUSUAL OPTIONS ACTIVITY

1. BOOM! Welcome to the Metaverse

2. Great PLTR Earnings With One “Surprise”

3. 3 Has to Be Better Than 1

Find your own ideas with the Unusual Options Activity Scanner

Let’s get started...


UNUSUAL OPTIONS ACTIVITY RBLX STOCK

BOOM! Welcome to the Metaverse

TI RBLX New Avatar Winning Picks 102721

On Facebook’s announcement last week, I mentioned that Winning Picks Premium Members were getting involved with another metaverse stock. It was RBLX!

RBLX reported earnings today and the stock is up huge.

Users love RBLX.

Engagement was up 28% year-over-year. The always excited CEO David Baszucki said:

"Engagement is our north star. We're very pleased that during the third quarter, people of all ages from across the globe chose to spend over 11 billion hours on Roblox."

And the CFO added more

“Growth in all of our core metrics - DAUs, hours, and bookings - displayed strong year-over-year growth despite lapping Covid-impacted periods and back-to-school seasonality.”

Revenues doubled!

But so did costs. Details. Details.

Here’s the stock price.

What Does the RBLX Stock Chart Say?

RBLX Chart - Options Activity 110921

RBLX stock doesn’t have a long history yet. That said, it’s established $70-75 as a good entry level.

Today, the stock is up 33% and trying to breakout to new highs. Although, I would say RBLX covered a lot of ground in 1-day to just knock down that door and race through it. But who knows? 

Every other stock seems to do it.

A 33% move on an “overvalued” $44Bn company has crushed the bears today.

Options Activity in RBLX Stock

Unusual Options Activity Scanner RBLX 110921

There’s unusual options activity in RBLX weekly options with the majority on the Call side. The $100 through the $125 Calls have been active with mainly buyers coming out of the gates.

Notice the IV Crush only affected the front two-week options.

Along the rest of the expiries, the IV is UP after earnings. Keep that in mind when everyone says IV Crush ALWAYS happens after earnings. I wrote a good piece to help make sure you understand what is IV Crush and most importantly… how to avoid it. If you have any questions, just ask me.

If there is no breakout tomorrow with new highs in RBLX, you will likely get some IV Crush tomorrow. But not that much, as there is a RBLX investor meeting next week.

Stay tuned.


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UNUSUAL OPTIONS ACTIVITY PLTR STOCK

Great PLTR Earnings With One “Surprise”

Unusual Options Activity PLTR 091521

PLTR reported earnings yesterday and matched the expected earnings number while beating revenues. Great!

Remember, the bears have been focusing on the imbalance between government and commercial customers. So, it was interesting to see PLTR emphasize their commercial business today:

“Palantir closed 54 deals of $1 million or more, of which 33 contracts were worth $5 million or more and 18 deals at $10 million or above. The total remaining deal value grew 50% Y/Y to $3.6 billion.”

Also, Barron’s reports:

“Palantir Chief Operating Officer Shyam Sankar noted in an interview with Barron’s that the company added 34 net new customers in the quarter, boosting the total to 203. That’s up from 20 net additions in the second quarter and 10 in the first quarter. He also noted that the company is seeing an acceleration in its commercial business, with revenue growth of 37% in the latest quarter, up from 28% in the previous quarter and 17% the year before that. The U.S. commercial business accelerated to 103% revenue growth in the quarter, from 72% one quarter earlier.”

But the bears wouldn’t be denied today. The stock is down 10%.

The Citi analyst threw in a “suprising weakness” comment referring to their government business, which happens to be PLTR's bread and butter. 

So, now that PLTR is starting to ramp the commercial business, the bear’s switch the focus to PLTR possibly losing government business because of Peter Thiel’s ties to Trump.

Sneaky!

What Does the PLTR Stock Chart Say?

PLTR Chart - Options Activity 110921

We saw call buying heading into earnings a few weeks ago. While the prices change, the risk-reward lines generally stay the same.

The $21-$27.50 range still stands. And the stock is trying to hold that dotted-line range I highlighted.

Falling through the 50 and 200dma is not a good sign. Keep an eye on this.

Bears have to be happy with today's outcome and will try to push the stock towards $21.

Options Activity in PLTR Stock

Unusual Options Activity Scanner PLTR 110921

Here you have an IV Crush after earnings. The stock is well within the range of possible outcomes yesterday and there’s a lot of options selling activity to close happening.

I’ll also point out that the crowd made a mistake this morning and bought thousands of front-week Call options on the open before the IV Crush could take its toll. While it may still work, they are feeling the pain of the stock getting hit AND the full force of IV Crush.

On the flip side, if it trades $30 tomorrow, no one will care about IV Crush.

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UNUSUAL OPTIONS ACTIVITY GE STOCK

3 Has to Be Better Than 1

Unusual Options Activity GE 110921

GE made a surprising announcement that the company will break up into 3 separate companies over the years. GE will focus on aviation, health care and energy.

“By creating three industry-leading, global public companies, each can benefit from greater focus, tailored capital allocation, and strategic flexibility to drive long-term growth and value for customers, investors, and employees,” CEO Lawrence Culp said in a statement accompanying the announcement. “We are putting our technology expertise, leadership, and global reach to work to better serve our customers.”

The stock hit $126.40 in the pre-Market today but has since come back in.

What Does the GE Stock Chart Say?

GE Chart - Options Activity 110921

GE Stock has been stuck between $96 and $115 for almost 9 months. It’s still digesting a move from $50 to $115 that started in October 2020.

This pause here at the high should be expected, but I think there is room for upside.

The stock is now firmly above the 50 and 200dma.

Notice the 50 and 200dma have converged. After today, that 50dma should start trending higher.

The height of this range is $19. A breakout above $115 with good volume and I would be looking for $134.

Options Activity in GE Stock

Unusual Options Activity Scanner GE 110921

The Call buyers are jumping headfirst into the front-week options. While I hope they are right, I think they will need some patience.

The December and January Calls are also being bought today. I tend to like those better.

GE has been a Winning Picks Premium name for some time. I’ve been looking for that breakout.

We’ll see.

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Now go make some money!

Best,
Felix

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