Unusual Options Activity in TSLA, NIO stock and CRM

December 1, 2021

Unusual Options Activity Volatility 120121

I repeat what I said yesterday, the SPY levels to watch are $453 and $465.

If you are trying to trade this tape, you want to be leaning against these levels. That means intraday Buying $453 and Selling $465.

Everything in the middle is noise.

If there are gaps outside these boundaries, then you must consider following that direction.

The market is doing what I call “shaking the tree.”

What is that?

Crazy up-and-down volatility, although never moving too far away from some central area.

Why is this happening?

It usually happens before a very significant move. The market wants to pay off the least amount of people in whatever direction it chooses.

Up or down?

Yes. Choose wisely.

How much of a move?

The distance from the high to the low of this range is $12 points. Add and subtract that from the range above. Yes… $477!

How fast?

By year end. Not kidding. ($441, too)


1. TSLA Target If THIS Happens.

2. Will NIO Break Out?

3. Good Stock With Good Earnings Gets Crushed

Let’s get started...


TSLA Target If THIS Happens.

Unusual Options Activity TSLA 093021

If I told you that Elon Musk would look to sell 10% of his TSLA stake, you and the rest of the world would have said the stock would be down… significantly!

Incredibly the stock hasn’t budged.

There are rumors of a potential stock split, which historically in a “bubble” market means the stock should rip higher.

The set-up is certainly there. Take a look.

What Does the TSLA Stock Chart Say?

TSLA Chart - Options Activity 120121

TSLA is digesting the sharp move from $800 to $1243. The flag looks like the bolder blue lines, although I do see a 2-week trend line forming (dotted blue line) that is attempting to breakthrough.

It’s firmly above the 50 and 200dma. Even better, the MACD and RSI have released some of the upward “pressure” without the stock going down. That’s a good sign.

It’s hard for anyone to short TSLA stock showing so much strength, although if one were to try, they would likely lean against the top of this flag here for a move toward $1,000.

The Options have one thing in mind.

Options Activity in TSLA Stock

Unusual Options Activity Scanner TSLA 120121

There’s been massive option volumes every day this week in the TSLA December 3rd $1,200 Calls. 70,000 are on the tape today. It’s clear that momentum traders are trying to get in front of this potential break to the upside.

If it does break through, then $1,350-$1,400 is not out of the question. To give you some context, that’s why the December 17th $1,200 Calls are $40. That’s 4 to 1 odds on your money, and it takes $4,000 to play the game with 1 contract.

Big Boy Game… And they don’t make it easy.

So, maybe these day traders catch it this week, maybe they don’t.

But a TSLA 4 to 1 stock split announcement on a Thursday night prior to expiration would cause a lot of pain for the market makers. And you know how bad Elon Musk likes to mess around with people.

Just saying.

Stop Guessing - Mobile


Will NIO Break Out?

Unusual Options Activity NIO 092021

After a measly 3,667 deliveries in October, NIO bounced back strong. Today, they reported 10,878 deliveries in November. Management had guided to 24,500 in the fourth quarter, which left about 20,800 after taking out October. Today’s number beat the midpoint.

This leaves the door open for NIO management to get the stock back on track at NIO Day on December 18th. The company is expected to showcase its upcoming cars, but usually they leave something more as a surprise.

The stock is going to need something special to break out of a long-term pattern.

What Does the NIO Stock Chart Say?

NIO Chart - Options Activity 120121

We’ve been looking at this flag for some time now. For NIO holders, it does get frustrating. But nothing goes up in a straight line. Stocks need to digest big moves and $12 to $67.50 in 4 months qualifies as a big move.

$32.50 remains the line in the sand on the downside.

The Bulls want to see a move that breaks through that down sloping trend line, right around $45. This could quickly get the shorts to cover and push the stock towards $55.

But first, they want to see the stock continue to hold the 50dma and retake the 200dma prior to NIO Day.

The Bears will continue to lean on any moves higher until the volume increases on positive days.

Options Activity in NIO Stock

Unusual Options Activity Scanner NIO 120121

NIO is seeing elevated activity today on their delivery report. Call buyers came in near the open in the December $40, $41, and $42 Calls. They have been beaten up pretty good. Not only did the stock decline, the IV Crush hit them like a ton of bricks.

Implied volatility started the day in the mid-80s. After 15 minutes it was in the mid-70s. And by 12pm, front-week options were in the mid-50s. Add in a declining stock and time decay, and the options are down 50-60%.

I hate seeing that. Playing the “fast” options day-trading momentum game is not easy. And chasing after options at 9:30am after an anticipated announcement is usually a recipe for disaster.

Be careful.

New Options Chain - Mobile


Good Stock With Good Earnings Gets Crushed

CRM Slack Trade Idea

CRM posted earnings yesterday that were good, with a wrinkle.

Sales for the 4th quarter were forecasted just in-line, and their 1st quarter Revenues were light by $100mm. Even though it’s off a $7.2 Billion quarter, a miss is a miss.

The market doesn’t like wrinkles.

That said, Morgan Stanley reiterated their Overweight rating saying:

“Salesforce remains one of our best secularly positioned names given enterprise IT spend prioritized towards digital transformation. Following the underperformance in shares post the Slack deal announcement, we see a favorable risk/reward and an attractive valuation for a leading franchise.”

The stock is off 7% on the report.

What Does the CRM Stock Chart Say?

CRM Chart - Options Activity 120121

CRM stock has slipped under what should have been support around $285.

It’s also now under the 50dma on good volume today. Growth investors are peeling off some stock until they see growth again.

The 200dma around $250 is the next support level.

The Options seems to think that may happen sooner rather than later.

Options Activity in CRM Stock

Unusual Options Activity Scanner CRM 120121

The unusual options activity in CRM is located in this week’s puts. The CRM December 3rd $270 and $260 Puts have traded 10,000 and 14,000 times, respectively.

The $70 Puts were traded right out of the gate and were then rolled into the $260 Puts. The RR$ for the $60 Puts are $253, which implies a Target Stock Price of $250-$251.

Take note on how much the Implied volatilities are down with the IV Crush after earnings even with the stock down. This means there will likely be more IV Crush in the coming days.

If you’re asking yourself: What is IV Crush?  Check out the write-up. It’s a great explanation on what’s happening underneath the hood.

Lastly, I tend to agree with Morgan Stanley. This is a 3-year story that needs to play out.

The stock gets interesting down here. I think you let this digest the move and start thinking about a plan to get long the name for next earnings. Management is smart enough to know that they need to beat the new 4th quarter numbers.

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