Unusual Options Activity in RIVN stock, DT and IAA

January 6, 2022

Biden-China

While President Biden has chosen the price of meat to hang his hat on, I think he should be paying attention to the other side of the world.

Keep an eye on this zero-Covid policy in China. I think it's a big deal.

This Bloomberg article talks about the effects on oil:

“In view of the government’s escalated mobility restrictions, IHS Markit has further lowered its projection for China’s total oil demand in the first quarter of 2022 by 420,000 barrels a day,” said Fenglei Shi, associate director of oil markets. That revision includes 248,000 barrels-a-day of gasoline and 124,000 barrels of jet fuel. In comparison, nationwide apparent daily oil demand was 14.2 million barrels in November, according to official figures."

That's some crazy numbers. 

Amazingly, oil is chugging along.

What happens when that Chinese oil demand comes back???

The Fed will need to make a binary decision... 

Let it fly!

Or, Crash it!

In early November with SPY at ~$450, I had asked for odds on the SPY reaching $500 AND SPY $400 in 6 months. The odds had to be close to 100 to 1.

It's probably still close to that. But, it's certainly not 0%.

Here are Today's TOP 3:

UNUSUAL OPTIONS ACTIVITY

1. Wrecked Cars is Big Business

2. AMZN Brings a Second Date to the Prom?

3. Shifting Risk in THIS Software Name

Find your own ideas with the Unusual Options Activity Scanner

Let’s get started...


UNUSUAL OPTIONS ACTIVITY DT STOCK

Shifting Risk in THIS Software Name

Unusual Options Activity DT 010621

Dynatrace is an SAAS company similar to a SPLK.

Like most of high-growth tech, especially software, DT is down significantly in the last 6 weeks.

What Does the DT Stock Chart Say?

DT Chart - Options Activity 010622

After opening lower today, DT stock has reversed and is up almost 2% on the day.

The problems for DT started with the break of the 50dma and then the weakness at the 200dma. In addition, the June breakout level at $57, which became support couldn’t hold.

The 50dma is quickly trying to cross that 200dma, which means a sharp move higher should see some resistance on the way up.

In a nutshell, it should take some time for DT stock to get back its mojo. And in the meantime, it’s still not a cheap stock.  

There’s an interesting trade in the options market that seems to highlight this thinking.

Options Activity in DT Stock

Unusual Options Activity Scanner DT 010622

It looks like Melvin Capital is active in DT options today. As of September 30th, they owned a lot of stock and options. Specifically, they owned 4.2 million shares and 13,000 options.

Today, someone bought the February 18th $55-$60 Call Spread 35,000 x 43,000x.

When comparing the options volume vs open interest, it appears that they are closing the $60 Calls and rolling down their strikes.

I suspect, given the move down, that they have switched from more stock to more options on this move down.

They are also buying earnings due in February.


Unusual Options Activity - Ultimate Guide

UNUSUAL OPTIONS ACTIVITY RIVN STOCK

AMZN Brings a Second Date to the Prom?

Unusual Options Activity RIVN 010621

AMZN announced yesterday that it would provide its in-car dashboard software and cloud services to Stellantis (former Fiat Chrysler). Obviously, not welcomed news for RIVN. They had to expect it, but it’s always a little jolting to see your partner find someone else.

“We always knew that our ambitious sustainability goals in our last mile operations would require multiple electric delivery van providers. We continue to be excited about our relationship with Rivian, and this doesn’t change anything about our investment, collaboration, or order size and timing.”

In other words, Rivian gets to eat the AMZN pie. Just not the whole pie.

The only problem is that Rivian has been priced like they were the only one at the table.

The stock is taking a beating today, down as much 15% in the morning.

What Does the RIVN Stock Chart Say?

RIVN Chart - Options Activity 010622

There’s not a lot of history to get a great read here.

But, we learned a few things over the last 2 months.

First, RIVN at $180 is way too high for the powers at be.

Second, there was some support at $107, which was the opening print on the IPO. That level now becomes resistance.

Lastly, we have 2 new levels to gauge at $90 and today’s low at $75.

For starters, Bulls want to recapture $90 and hold.

The Bears are salivating over that huge volume in December and will find spots to lean on the stock until that group sells.

Options Activity in RIVN Stock

Unusual Options Activity Scanner RIVN 010622

There’s unusual options activity in RIVN weeklies that exploded higher today.

The RIVN January 7th $75 traded 15,000x and the $80 Puts traded 12,000x today. The incredible part is that a few people were able to buy the $80 puts for under $0.20.

By 10:15am, those options had traded $6.00. That’s a 3,000% return in 30 minutes!

There is a consistent flow of RIVN puts being bought across the front few expiration months with a concentration in the $75 and $80 strike.

The RR$ for the January $80 and February $80 Puts are near $70 and $65, respectively.

It does feel a little late here to be loading up on Puts. They hate tech and EV multiples are expensive, but the stock is down 25% in 4 days. Earnings are not until March.

Just my 2 cents worth.

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Unusual Options Activity Improve Your Game

UNUSUAL OPTIONS ACTIVITY IAA STOCK

Wrecked Cars is Big Business

Unusual Options Activity IAA 010621

IAA is global digital marketplace connecting vehicle buyers and sellers.

But not your ordinary cars.com where you buy a car off a dealership. IAA’s platform facilitates the marketing and sale of total-loss, damaged and low-value vehicles… wrecked cars.

I don’t know much about the name, but I am intrigued by the list of shareholders.

What Does the IAA Stock Chart Say?

IAA Chart - Options Activity 010622

IAA stock has spent almost the last two years trending in a channel, first up then down.

On the way up, you can see the stock bouncing off the 50dma and changed directions only after breaking the 50dma.

Since then, 2021 has been a choppy move lower.

Unfortunately, the stock is firmly under the 50dma and the 200dma. IAA is having trouble getting above the 50dma on this latest move, and the MACD looks slightly negative to me.

If the stock breaks this lower trend line, I suspect the Bears will look for $42 as a target.

But someone is thinking a lot higher.

Options Activity in IAA Stock

Unusual Options Activity Scanner IAA 010622

Melvin Capital is active out there today.

It appears as if they are rolling down their 20,000 IAA December 16th $55 Calls into 20,000 IAA October 16th $50 Calls.

This makes it easier to get an understanding of their Target Stock Price.

The December RR$ is $74.11.

The October RR$ is $67.50.

They prefer the October’s, which tells us that they are looking at a range closer to $70-$75.

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Now go make some money!

Best,
Felix

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