Unusual Options Activity in ZM stock, CGC and NKE

December 20, 2021

Unusual Options Activity Eurodollars 122021

This is a good article describing Eurodollars and the important role they've played in previous Stock Market crashes.

It will also help you understand why the Dollar has been so strong in the face of multi-trillions of $s being printed by the U.S. Government.


1. What to Expect with NKE Earnings?

2. Is the Unabomber is Back in CGC?

3. To Buy or Be Bought? That is the Question.

Let’s get started...


What to Expect with NKE Earnings?

NKE Unusual Options Activity 091321

NKE is under a lot of pressure ahead of earnings after the bell.

Evercore kept its outperform rating on the athletic retailer and thinks that the bad news is already priced in.

“The good news is that demand is not Nike’s issue (at least until this Omicron spread), and all signs point to the continuation of the strong sneaker and casualization trend well into 2022.”

The chart tells you how confused the market is here.

What Does the NKE Stock Chart Say?

NKE Chart - Options Activity 122021

NKE stock has traded within a very large range, $145-$180, over the last 6 months. After a blowout earnings report in late-June, the company has dealt with supply issues stemming from Vietnam factory closings and now this Omicron scare.

$145 was the breakout level that became support. It was tested in late-September.

The 200dma at $152.89 should give it some support before that $145 level, while the 50dma at $166.25 might see some resistance.

The set-up for earnings is interesting.

Options Activity in NKE Stock

NKE Chart - Options Activity 122021

Most of the options volume is in the front-week options playing the Earnings announcement.

The NKE December 23rd $155 and $157.5 Straddles are near $11.60. We can use $11.60 and add/subtract from $156.58 to get the breakeven prices of $144.98 and $168.18. This is a 7.45% move up or down.

Or we can multiply $11.60 x 1.25 and get $14.50. Add/subtract that and we get this range, $142.08 - $171.08. The market is telling you that 68% of the time it will end between this range at expiration.

These ranges are also good markers to watch if you’re trading the name after the earnings.

Of course then you must consider the IV Crush that will happen... and how to avoid it!

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Is the Unabomber is Back in CGC?

Unusual Options Activity CGC 122021

Piper Sandler downgrades CGC today on limited sales growth and valuations:

“Canopy’s sales trends remain under pressure across its business, and we are lowering our estimates accordingly. Further, our sum of the parts analysis implies potential valuation levels of $5-6, even with applying some higher multiples than its peer comps.”

The stock has been sold consistently since the highs in February.

What Does the CGC Stock Chart Say?

CGC Chart - Options Activity 122021

CGC stock did a full round trip over the last 16 months from $14 to $56.50 back to $8.50.

Since those highs back in February, there's been little to cheer about.

The stock has not been able to sustain a move above the 50dma.  

Tax-selling is likely pressuring CGC stock here.

Notice the heavy volumes (blue boxes) on the way in and now the complete exit over the last couple of months.

On today's downgrade, it appears like our friend is back.

Options Activity in CGC Stock

CGC Chart - Options Activity 122021

There was a SNAP put seller not long ago, the “Unabomber.” I mentioned how he pops up during these bubble markets and sells a ton of “teeny” puts. He wins often but eventually takes some brutal losses.

Looks like he won nicely in SNAP. It might be him again here in CGC today.

Someone sold 35,000 CGC January 21st $7.50 Puts at $0.23. He is taking in $805,000 in premium for 4 weeks work. The risk is that he has to buy 3.5 million shares of stock at $7.50, worth $26.25 million, if CGC is below that level at expiration.

So now he just sits and waits.

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To Buy or Be Bought? That is the Question.

Unusual Options Activity ZM 122021

With Omicron taking over the airwaves and crushing stocks, the playbook seems to be off. In an environment of lockdowns and back to the work-from-home (WFH) mode, you would think ZM would be up significantly as the rest of the market falls.  

The stock is only up 2%.

Top executive Ricky Kapur, Head of Asia Pacific at ZM, talked about the upside for ZM in a CNBC interview today:

“I think there are three big shifts that are happening post-pandemic that businesses are investing in and that’s spurring our growth and relevance. (1) Employees are demanding flexible work arrangements and the ability to work frictionless, irrespective of where they are. (2) Whether it’s a retail experience, the ability to live feed into the store and speak with a live person — see a product, have a real conversation, and then make a purchase decision. Consumers are expecting that from companies. (3) The third big shift is that digitally native companies are building innovative platforms to create services that reach out to new consumers, especially in areas such as health care and education.”

Perhaps, this time around the market is focusing on the fact that ZM might be a one-trick pony that is facing increasing competition.

What Does the ZM Stock Chart Say?

ZM Chart - Options Activity 122021

ZM stock was one of the huge Covid-19 winners rising from $80 in March 2020 to $600 only 7 months later.

The re-opening of the economy hurt the stock. It continues to have trouble under the 50 and 200dma.

The Bears will lean on the $240 level as that was broken in November and then showed strong resistance.

With the best possible news out today for this stock (increased potential lockdowns and corporations quickly moving to hybrid work schedule), a small increase in the stock looks fairly weak. This could embolden the Bears to try to crack that $180 level.

For the Bulls, ZM needs to break through this $240 level and reclaim the 50dma. Until then, the stock is suspect.

While the volume is slightly higher at these levels, there seems to be a lot of holders not willing to let go just yet.

Options Activity in ZM Stock

ZM Chart - Options Activity 122021

As you would expect, ZM is seeing Call activity today. In fact, Calls are dominating the Puts by an 8 to 1 ratio.

There were buyers of the $200, $205, $210, $215, $220 and $230 Calls right out of the gate. Since then, it appears that buyers are selling them out.

My quick take on ZM is that there’s a big difference between March 2020 and today. Customers want a full platform and dozens of apps that make things easier. Zoom was an immediate fix last year and it might offer better quality than MSFT Teams’ product, but it lacks in providing a cohesive workspace for the user. And how long will that “better quality” advantage last? They are competing against MSFT!

ZM must buy someone or be bought themselves, however, I would suspect that a buyer might think they are too expensive.

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