Unusual Options Activity in TSLA stock, HOOD and WFC

January 3, 2022

Options Market Makers

I wanted to start the year off well.

And there is no better way than to make this community money.

I thought to myself ... What's the easiest way to do that?

Without a doubt, the easiest and fastest way to do that is to save you money.

When trading stocks or options, saving money is the same as making money.

I'm about to save you a lot of money!

But first I need to tell you who is taking it from you ... the Options Market Makers.

Here are today's TOP 3: 

UNUSUAL OPTIONS ACTIVITY

1. A Hot 2022 Start for THIS Sector

2. TSLA Call Buyers Have This Target in Mind

3. Has HOOD hit a Bottom?

Let’s get started...


UNUSUAL OPTIONS ACTIVITY WFC STOCK

A Hot 2022 Start for THIS Sector

Unusual Options Activity WFC 010321

Barclay’s analyst upgrades WFC to Overweight from Equal Weight and raised the Price Target to $62 from $50 saying:

“WFC stands to benefit the most of our coverage universe from higher interest rates while it has made significant investments in its control functions since its retail banking sales practice issues came to light. The eventual lifting of regulatory restrictions also represents a potential catalyst looking out… [Regarding the Bank Sector] After meaningfully underperforming in 2020, Large-Cap Bank stocks outperformed in 2021, rising 37% compared to the S&P 500′s 27% increase. We believe this outperformance can continue into 2022. We are above consensus EPS for the vast majority of our coverage for both 2022 and 2023.”

I agree. I continue to like the banks.

They haven’t necessarily been good option plays but they are good stocks with strong balance sheets trading at fair multiples.

These aren’t the same banks from 2007-08 before the crash.

WFC is especially interesting because it has an embedded call option in it as well. The Fed has placed an asset cap on them after the phony-account scandal a few years ago. This has cost them Billions in profits.

What Does the WFC Stock Chart Say?

WFC Chart - Options Activity 010322

This is a 5-year weekly chart of WFC stock.

The stock has finally recouped the 2020 drop. This $50-52 range should be an important range to watch.

The stock is showing good strength for the Bulls with the MACD declining a bit while the stock is moving higher.

On the daily chart, WFC stock recaptured the 50dma today. A break higher through $52 should get this stock moving toward $58.

The Bears are likely not shorting the financials with any size.

The Bears think interest rates will move much higher, which is generally good for the banks. The question is whether their NIM will hold and/or banks can build their loan book if the economy goes into recession and loan losses rise.

Options Activity in WFC Stock

Unusual Options Activity Scanner WFC 010322

There is Call buying across the board in WFC options. Calls are leading the Puts by a 2.5 to 1 ratio.

I would keep an eye on the wall of Open Interest in January. It’s stacked with tens of thousands of Calls on strikes all the way up from $47.50 to $55. The question is whether these are Call Sellers or Call buyers. You’ll need options data to figure that out.

Earnings are due on January 14th.

Pick the Right Option

UNUSUAL OPTIONS ACTIVITY TSLA STOCK

TSLA Call Buyers Have This Target in Mind

Unusual Options Activity TSLA 010321

What a way to start the year, huh?

Boom! Up a quick 10% out of the gate on great delivery numbers that exceeded expectations by almost 20%.

It gets their annual run-rate over 1mm cars after delivering 936k in 2021.

Deutsche Bank reiterated its Buy Rating on the stock:

“We continue to believe Tesla’s trajectory for its battery technology, capacity and especially cost could help accelerate the world’s shift to electric vehicles and extend Tesla’s EV lead considerably… While we maintain for now our 2022 deliveries estimate of 1.47mn units, 4Q production suggests upside potential to our forecast. Our 2022 deliveries represent 58% YoY growth, which should be supported by the new Berlin and Austin factories, as well as capacity expansion in existing factories.”

Now, imagine they announce a stock split?

While stock splits don’t change anything for the company, bull markets love stock splits.  

What Does the TSLA Stock Chart Say?

TSLA Chart - Options Activity 010322

The recent bounce off $900 clearly establishes a range for TSLA stock. Below $900 something went wrong. Above $1,250 and you probably see a quick move toward $1,600.

TSLA recently broke that dotted trend line on the chart, which makes it more likely to retest the high range.

The Bulls are happy with stock firmly above the 50dma and 200dma and the MACD just starting to rise.

The Bears might point to the wide differential between the two moving averages.

But with the fundamentals improving, I suspect the Bears are retreating.

Shorting this stock has been the wrong fight to say the least.

The next major short possibility would be a move to new highs on good volume and then a sharp move back under the old high also on good volume.

Until then, this is one stampede you don’t want to get in front of.

Options Activity in TSLA Stock

Unusual Options Activity Scanner TSLA 010322

There’s unusual options activity today in the TSLA January 7th weekly Calls.

Right out of the gate, buyers swarmed the $1,150 and the $1,200 Calls with 40,000 and 70,000 contracts, respectively.

Take a look at those RR$... $1,220.89 and $1,255.96 by Friday!

To buy the $1,200 Calls you have to be thinking around $1,280 on the stock, which would be a new high.

Do you think they’re paying too much?

Would you sell those?

That’s what makes a market.


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UNUSUAL OPTIONS ACTIVITY HOOD STOCK

Has HOOD hit a Bottom?

Unusual Options Activity HOOD 010321

Options flows in the fantasy names are way down over the last 6 weeks.

Recall, HOOD did their IPO using first quarter numbers when things were rocking and rolling.

At the time, the action seemed normal, but those days were absolutely incredible.

And that won’t happen every year.

Which is why HOOD insiders tried to sell 98 million shares when the stock rallied to $82.

HOOD stock now trades at $18.59. Valuing peak earnings in perpetuity will ALWAYS be a disaster.

But is the selling over?

What Does the HOOD Stock Chart Say?

HOOD Chart - Options Activity 010322

That’s an ugly chart with a lot of bag holders.

Unless you sold at $82. Then you're a hero.

There really isn’t enough time to get a good read from this chart... except, Be Careful.

It doesn’t even have the “get me out” volume spike that you would like to see at a bottom.

And just when you think we are at the bottom, this happens…

Options Activity in HOOD Stock

Unusual Options Activity Scanner HOOD 010322

I am not sure, but it looks like someone bought the HOOD May 20th $35 Calls on December 1st for around $12.80.

Today, it appears that they sold 745 HOOD May 20th $35 Puts to close and bought 9,000 HOOD May 20th $17 Puts for $3.10, which implies a move toward $10. Yikes!

But there’s hope if you’re still long, a buyer stepped in this morning for more than 15,000 January 28th $21 Calls.

Earnings are due in two weeks. I can’t imagine the report will be good given the massive volume declines in the fantasy names.

Does HOOD want a seat at the “$10 Club”?

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Best,
Felix

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