Unusual Options Activity in RIVN stock, IGT stock and KD

December 6, 2021

Unusual Options Activity Russia Swift USD 120621

Hmmmm… This may not read like a big deal, but it would be a BIG deal.

“Officials have also been weighing disconnecting Russia from the SWIFT international payment system, upon which Russia remains heavily reliant, according to two sources familiar with the discussions. This is being considered a ‘nuclear’ option. The European Parliament passed a nonbinding resolution in the spring calling for such a move should Russia invade Ukraine, and the US has been discussing it with EU counterparts.”

I think Russia would consider it pretty close to a declaration of war.
Did anyone in the Biden administration read THIS other article last week.

Unusual Options Activity Russia Hypersonic 120621

The last dance is when the US Dollar falls.

That could be 2 years, 10 years, 50 years, or the start could be when they kick Russia off SWIFT. I think they want to avoid having Russia and China join forces to start the next Trillion$ fintech and then IPO it on the NYSE as a VIE ...

Ticker = SWFT. (It's open, I checked!)

Wouldn't be good. Just sayng.

UNUSUAL OPTIONS ACTIVITY

1. Buying the Pullback In IGT

2. How High Can RIVN Stock Go?

3. THIS Stock Finally Catches a Big Buyer

Find your own ideas with the Unusual Options Activity Scanner

Let’s get started...


UNUSUAL OPTIONS ACTIVITY IGT STOCK

Buying the Pullback In IGT

Wheel of fortune

We last looked at IGT back in August and September when there was aggressive call buying pointing to the high $20s and then specifically to $33.

So, it may (or may not anymore) surprise you to see that the stock ripped from $19.68 in that August report to a high of $32.71.

In the last month, casinos have taken it on the chin. And when they suffer, the supplier of the casino games is likely not far behind.
IGT has come off the highs, but it’s still in an uptrend. Take a look.

What Does the IGT Stock Chart Say?

IGT Chart - Options Activity 120621

IGT stock broke the 50dma and is coming up on a rising 200dma.

While the chart is bullish, I suspect that IGT will need some time to recover from the immediate damage done over the last several weeks.

More specifically, the 50dma seems quite distant from the 200dma.

So, the $23-$28 range for IGT is likely over the next month or so.

The Bears are going will lean on the $27-$28 range if the stock drifts higher. And they surely, will pounce on a break of the 200dma near $22.25.

On the options front, it looks like the Call buyer we saw back in August-September is back.

Options Activity in IGT Stock

Unusual Options Activity Scanner IGT 120621

Someone stepped in today to buy 7,000 IGT April 14th $26 -$32 Call Spreads. They paid $2.80 and sold the upside calls at $1.15 for a total of $1.65. That Call spread could be worth a maximum of $6.00. This would be $4.35 in profit, or 264% returns.

Notice that the buyer is purchasing the option in the shaded area and selling an option in the unshaded area. Remember, you want to find opportunity in the unshaded area to buy options. If the RR$ is too high for your Target Stock Price, then you can look at spreads with the unshaded strikes. Exactly what was done here.

Earnings are in early March.

The buyer is likely Targeting $31-34 on the stock. I suspect if the stock goes lower, he will roll down those $29 Calls to get into the $23 or $25s.


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UNUSUAL OPTIONS ACTIVITY RIVN STOCK

How High Can RIVN Stock Go?

Unusual Options Activity RIVN 120621

Several analysts are out with reports on RIVN today.

Morgan Stanley initiates coverage with an overweight and $147 Price Target.

“Rivian’s compelling product, strong management, and deterministic access to capital are underpinned by a strategic relationship with AMZN to decarbonize the final mile. We see it as ‘the one’ that can challenge Tesla… The electric delivery van (EDV) has the potential to dominate the fast growing final mile EV fleet which has been largely unaddressed by the EV market until now.”

The MS analyst Adam Jonas believes AMZN can order ~300,000 by 2026.

Goldman wasn’t as bullish offering a Neutral rating and a $94 Target Stock Price, $10 lower than yesterday’s close.  

“We believe that Rivian has an attractive product set in terms of hardware features, a full ecosystem of software, services, and charging. We believe its ecosystem and full set of solutions, along with a growing brand presence, will not only help the company to have strong product traction, but also allow for recurring revenue opportunities as its vehicles are connected and can be updated over the air… Overall, we believe Rivian is well-positioned in the industry. However, the automotive industry has historically been difficult for new entrants to scale, including in EVs.”

JPM also came out neutral.

Who do you think is first in line to get the next Investment Banking deal?

What Does the RIVN Stock Chart Say?

RIVN Chart - Options Activity 120621

There’s not a lot of history with RIVN stock, so technical analysis isn’t going to give you too much.

I would highlight the first day of trading on November 10th where over 100mm shares traded. The stock closed slightly over $100.

Over the last 2 trading days the stock has bounced sharply off that $100 level.

Someone sees value there and is willing to buy at this level.

The high on RIVN stock was $180 on November 16th.

Wide range, I know.

Interestingly enough, the options are saying there’s even more upside than that - a lot more upside!

Options Activity in RIVN Stock

Unusual Options Activity Scanner RIVN 120621

There’s unusual options activity in RVIN March options. A buyer has spent over $1 million taking 3,500 RIVN March 18th $260 Calls for more than $3.

These are way OTM Calls, however, it is interesting that they’ve been active over the last few days - both buying and selling.

All I will say is that if RIVN stock goes from $100 through $180, then it’s on some sort of exponential move and can absolutely make a run at $260.

What would that mean for the stock prices of all the other EV names?

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UNUSUAL OPTIONS ACTIVITY KD STOCK

THIS Stock Finally Catches a Big Buyer

Unusual Options Activity KD 120621

There was a trade done in KD on Friday that was interesting and worth showing here.

KD is the IBM-spinoff Kyndryl. It was the consulting arm of IBM that wasn’t growing, essentially, an army of consultants trying to mainly sell IBM products.

KD is cheap stock, however, it’s likely being sold because the holders of old-IBM wanted to own the “exciting” part of new-IBM focusing on AI, the Cloud, and Quantum computing. This means they likely want to be out of KD by December 31st.

The chart sure gives that impression:

What Does the KD Stock Chart Say?

KD Chart - Options Activity 120621

KD stock started trading freely on November 4th. With almost 50mm shares traded on that day and the stock lower, most people were bailing.

The selling in KD stock continued for about a month until KD posted 3 consecutive higher days since December 2nd.

Could the stock have found a bottom near $16?

Options Activity in KD Stock

Unusual Options Activity Scanner KD 120621

I started looking at the stock near $16 in late-December.

The thinking was that KD had a large opportunity in front of them to open the gates up for its consultants to sell all technology products. These consultants are considered some of the best and smartest in the business. Couldn’t each of them produce a lot more revenue by selling a variety of products as opposed to mainly pushing what IBM had to offer?

The main issue stopping me from buying Calls in KD was the high implied volatility (and large bid-offers) for what seemingly should be a boring stock. I think it’s still rather high.

But last Friday an interesting trade came in where a long-term holder was taking a stand.

With KD stock at $17.83, the KD June 17th $15 Puts were sold 10,000x at $1.80 to offset the purchase of 10,000 June $17.50 - $25 Calls for $2.45. This is a net payment of $0.65.

This strategy gives that buyer 12% cushion to the downside and 10 to 1 shot to the upside.

The person doing this trade is likely also buying the stock.

My guess on the buyer? … BlackRock.

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Now go make some money!

Best,
Felix

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