Unusual Options Activity in UBER stock, LCID and PYPL

January 31, 2022

Unusual Options Activity Games 013121

During the Podcast days I mentioned that all these video game makers would be gobbled up within 5 years. I think I said,

“It was impossible for them not to be bought. And once one went, they will all go bid.”

That included ATVI, EA, TTWO, ZNGA, etc.

[I also said ATVI would be $150-$200 but that's just details]

Essentially, these companies are the content for the streaming technology… and remember, “Content is King.”

Fast forward a year and TTWO buys ZNGA, MSFT takes ATVI, and today SONY swallows Bungie, who developed MSFT’s Halo.

Also, the Metaverse has made these companies much more valuable because of their expertise in building these fantasy worlds.

So, who will take out EA?

And by the way, if you think SNAP, TWTR, and PINS will stay independent for much longer, then I have a bridge to sell you in Brooklyn for cheap… low money down, pay me the rest later.

Here's today's Top 3:

UNUSUAL OPTIONS ACTIVITY

1. Is the PYPL Bottom in?

2. How to Play LCID Over the Next 6 Weeks

3. It’s Showtime for THIS Tech CEO

Find your own ideas with the Unusual Options Activity Scanner

Let’s get started...


UNUSUAL OPTIONS ACTIVITY PYPL STOCK

Is the PYPL Bottom in?

Unusual Options Activity PYPL 102121

PYPL has been an unmitigated disaster for the last few months. The failed “rumored, but probably not a rumor” PINS bid hurt the perception of organic growth and then earnings didn’t help that worry.

But Fintech is catching a bid today.

Is this (finally) the turn?

What Does the PYPL Stock Chart Say?

PYPL Chart - Options Activity 013122

Last Monday, the stock was cut in half from the July highs.

The stock has been below the 50 and 200dma for months. But notice how wide the differential is between the two.

Now, also notice the MACD diversion going on over the last 2 months. This shows that the selling strength is lightening up.

I kinda think about it like Rocky vs Clubber Lang. At some point Clubber Lang’s punches don’t have the same effect as they did in the earlier rounds.

So, unless PYPL is going to $0, I would expect a move back toward $200 over the next couple of months that would establish a range.

The Bulls want to see a move through $180, which was support and is now close to the 50dma.

The Bears must be lightening up here in front of earnings. I’d be surprised if they are not. But if PYPL can’t get through $180 they will come back again in full force.

Options Activity in PYPL Stock

Unusual Options Activity Scanner PYPL 013122

With earnings tomorrow, options activity is rather muted. This signals that investors are tired of buying Calls, which may also be the opportunity.

The $170 straddle is priced at around $12.30, which makes the breakeven prices near $157.70 and $182.30.

The 1-standard deviation move for Friday gives us a range near $155.50 and $186.50.

$180 is the level to look out for. Above that and PYPL can get some legs.


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UNUSUAL OPTIONS ACTIVITY LCID STOCK

How to Play LCID Over the Next 6 Weeks

Unusual Options Activity LCID 090121

LCID stock had a lockup expire a couple weeks ago, which gave the stock some new supply.

Frankly, I thought the stock held up well until they decided to break the EV sector and send those stocks down 25-30%.

LCID was no exception, but what’s next?

What Does the LCID Stock Chart Say?

LCID Chart - Options Activity 013122

That ABCD formation lined up pretty good over the last couple of months, which means a healthy bounce in the near-term is not out of the question.

However, notice we now have a down trending line to contend with that coincides with a falling 50dma.

LCID is fighting to stay above the 200dma, which it broke last week.

The Bulls need that as a start. Before they contend with $35 and then $40.

The Bears are likely covering some here at the 200dma and will press that $35 range.

There’s a lot of work that was done in the $22.50 range, which makes me think the $22.50 - $40 range is likely LCID’s home for the next 2 months or so.

Options Activity in LCID Stock

Unusual Options Activity Scanner LCID 013122

There was unusual options activity in LCID weekly options this morning.

The LCID February 4th $30 Calls traded 20,000x as buyers are looking for this elusive bounce.

But check out the March $30 Straddle, it’s priced near $9.00.

That coincides well with our stock range, which implies that the market is pricing LCID pretty good right now.

So, if you are long LCID stock and won't be selling anytime soon, then a March $32 - $38 “1x2” Call Spread makes some sense, where you:

Buy 1 LCID March $32 Calls
Sell 2 LCID March $38 Calls
Net -Net = $0.20 credit.

This structure takes you out of a LCID long at $44. This spread would be worth $0 at $44, but your stock would be up $14. The max the spread can be worth is $6 at $38. You can sell the spread out any time before expiration.

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UNUSUAL OPTIONS ACTIVITY UBER STOCK

It’s Showtime for THIS Tech CEO

UBER Unusual Options Activity 091321

Goldman Sachs reiterated their Buy rating on UBER and LYFT today as they see improved visibility going forward:

“In our view, as we move through 2022, these companies will begin to show sustained & improving profitability for the first time with healthy incremental margins, which could give a broader group investors confidence in the ability of UBER and LYFT to compound profitability & FCF over the next several years.”

That said, these stocks have been shown very little love by investors over the last year as both are still dealing with issues, specifically, employee classification.

UBER has earnings and an investor conference next week, which should be interesting.

What Does the UBER Stock Chart Say?

UBER Chart - Options Activity 013122

UBER is in a down trending channel and the 50 and 200dma is trending lower.

The slight positive is that there’s a little bit of a MACD diversion forming here as the stock regained $35.

For the Bulls, they want to see a good earnings report, a great presentation at the Investor Day, and a move back through the 50dma near $40 to push toward $44.

The Bears will likely get more comfortable above $42 leaning on that same $44 level.

Options Activity in UBER Stock

Unusual Options Activity Scanner UBER 013122

While there is some shuffling around in this week’s option and regular February expiration, I wanted to focus in on the UBER February 11th $37 straddle.

The straddle is trading at $4.40, which gives us breakeven prices near $32.60 and $41.40.

Considering the chart and the 2 catalysts coming up, I think they have these options priced too cheap.

The CEO bought $9mm of stock in November at $44. I have to believe he will somehow make the case that UBER is worth a lot closer to $70 over 2 years.

We’ll see.

Click here if you need more options trading picks with in-depth analysis.

Now go make some money!

Best,
Felix

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