With all the news on Omicron in the last few days, I like how Goldman Sachs handicaps the possible outcomes.
UNUSUAL OPTIONS ACTIVITY
1. How Does This Story End?
2. Does a New CEO Mean a New Trend?
3. Long-Term Investors Leaving THIS Stock
Let’s get started...
UNUSUAL OPTIONS ACTIVITY PFE STOCK
How Does This Story End?
The world is now dealing with the new covid variant, Omicron. If this is how it's going to go for every variant, which are likely to pop up multiple times per year, then we are in a lot of trouble.
Nonetheless, PFE CEO Albert Bourla made positive comments on his newly developed pill:
“The good news when it comes to our treatment, it was designed with that in mind, it was designed with the fact that most mutations are coming in the spikes. So that gives me very high level of confidence that the treatment will not be affected, our oral treatment will not be affected by this virus.”
The story with PFE is simple. Analysts do not have Revenue expectations in the next few years high enough IF Covid revenues stay elevated. It’s not even close. So, anything that will keep Covid Inc. alive is great for PFE.
PFE jumped on Friday and again this morning. But is it tired up here?
What Does the PFE Stock Chart Say?
PFE has been volatile over the last few months, however, you can see a completed ABCD pattern. That’s something to watch.
The Bulls are clearly in control here. PFE is trading at the highs and above the 50 and 200dma.
The Bears will say the stock is extended here. They would point to today’s reversal, the end of that ABCD pattern, the distance from the 50dma, and an elevated MACD.
The option flows today are mixed.Options Activity in PFE Stock
There was unusual options activity out of the gates in the front-week PFE options. The December $55, $56, and $57.50 Calls amounted to more than 57,000 contracts on this morning’s spike.
There was additional volume in the further expirations. This volume was divided between call selling and put buying.
So the question is still … Are the Vaccines Here to Stay? And if so, at what pace will they be distributed? If the answers are “yes” and “annually” and “worldwide,” then PFE is still cheap.
We’ll see.
UNUSUAL OPTIONS ACTIVITY TWTR STOCK
Does a New CEO Mean a New Trend?
TWTR CEO Jack Dorsey stepped down today and left the reins to new CEO Parag Agrawal. Jack Dorsey had been serving as CEO of both TWTR and SQ.
Elliott Management tried to oust Dorsey last year. They are large holders of TWTR stock and wanted a CEO focused solely on their company. Elliott issued a statement today saying:
“Twitter is now executing against an ambitious multi-year plan to dramatically increase the company’s reach and value, and we look forward to the next chapter of Twitter’s story. Having gotten to know both incoming Chairman Bret Taylor and incoming CEO Parag Agrawal, we are confident that they are the right leaders for Twitter at this pivotal moment for the company.”
The market loved the news.
Then it didn’t.
What Does the TWTR Stock Chart Say?
After hitting $52.25 near the open, the stock went straight down this morning.
Not something that the hopeful Bulls wanted to see after the sharp declines in the last month.
Under the 50 and 200dma, the Bears will continue to lean into the stock until TWTR shows them that it can hold a rally.
Like many other stocks, TWTR is likely also under some end-of-year tax selling pressure.
The Bulls are looking for this long-term support range around $46 to hold and a fresh start with 2022.
Options Activity in TWTR Stock
TWTR implied volatility is up across the board. The front-week Call option buyers came in heavy in the TWTR December 3rd $50 Calls. They’ve been decimated since.
There continues to be Call buyers in the December options, but others are starting to move into the January Calls.
Earnings are not released until early February.
I suspect you will need time and the earnings announcement as the stock has done a lot of damage in the last month.
UNUSUAL OPTIONS ACTIVITY CCL STOCK
Long-Term Investors Leaving THIS Stock
After Friday’s wipeout, you would think today’s slightly more positive posturing on the new covid variant would have the airlines and cruise liners back to even.
Not so.
These stocks have been priced for some normality similar to 2019.
Without “Normal” they are going to need to raise a lot more money, which will put much more pressure on their stocks.
CCL is a prime example of how bad it can get.
What Does the CCL Stock Chart Say?
CCL made a huge push in late 2020 and early 2021. You can see the volume there.
As the vaccine brought some hope into getting things back to normal, shareholders were willing to hang on.
Friday’s news was a reminder that, “normal” may be much farther than anticipated.
The $20 level is a major level for CCL that has held for most of the year.
A firm break on Friday indicates the lack of support by the long-term thinkers and it has put a lot of pressure on anyone holding the stock.
No one wants to be the one holding the bag here.
With these situations, you want to watch for the larger volume sales. The “bottom” should have volume numbers that look similar to last year.
Options Activity in CCL Stock
CCL is trading almost 2x the average amount of options volume today. The volume is evenly distributed between puts and calls.
One trade caught my eye…
The CCL January $15 Puts were bought today. It appears to be a closing trade from a seller that was using the options to build a long position. That type of seller is usually a long-term investor.
Considering my read on the chart, it makes sense that several long-term holders are giving up.
Earnings are in a few weeks.
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Best,
Felix
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