Unusual Options Activity in LCID, WYNN and AFRM

September 16, 2021

Unusual Options Activity for 091621

Everyone has theories, but no one really knows what China is going to do next. 

However, it does seem like they don’t have a worry in the world about destroying a good portion of what they built over the last 20 years.

After mulling over what to do with their biggest real estate developer for months, China made the decision to let Evergrande fail:

“China's largest, and most systematically important real estate developer, China Evergrande (and its $300+ billion in debt), collapsed on the 13th anniversary of Lehman's bankruptcy filing, when Beijing told Evergrande's creditor banks that the insolvent company, which recently hired Houlihan Lokey as bankruptcy advisor, would not pay interest on its debt next week, nor would it repay principal, in effect blessing the coming default.”

This is a big deal. 

Of course, no one on this side of the world seems to care that China may crawl to a halt in a very short time.

Nonetheless, it’s a big deal!

Evergrande is their largest developer. China has dozens more using the same financial shenanigans that Evergrande did – putting losses into “Inventory,” because if you don’t sell, there are no losses.

Until, of course, you have to sell. 

Ahhh, minor details.

Anyways, their date to make this decision is interesting, no?

And the “warning” at the end of the company’s disclosure:

"Investors are kindly requested to pay attention to investment risks."

It seems like Beijing officials want to make it clear, if letting a $300Bn developer fail isn’t enough, who is to blame… We are!

It’s like they want the market to crash, have their own people lose a lot of money and feel the pain, then blame Western Capitalism so they … Never. Do. It. Again!

Or maybe, there is something much more nefarious about their actions.

These are some 5D Chess moves… certainly, not checkers.

Let's get into today's options flow action...

UNUSUAL OPTIONS ACTIVITY

1. Is Today’s News Enough for this EV Stock?

2. It’s not just LVS, it’s All of Macau. 

3. This Trend is Unstoppable Right Now


UNUSUAL OPTIONS ACTIVITY LCID STOCK

Is Today’s News Enough for this EV Stock?

Unusual Options Activity LCID 091621

The bulls say that Lucid stock (LCID) is a better version of Tesla stock (TSLA).

The bears remind you that they haven't produced a car yet.

“Yet!” the bulls reply.

Either way, the news today will undoubtedly fan those flames.

“… one variant of its (Lucid’s) upcoming luxury Air sedan has an EPA range of more than 520 miles. The official rating of the Lucid Air Dream Edition Range variant pushes Lucid past Tesla, a company that has long dominated in this category… The official EPA range of the Lucid Air — and its many editions — have been expected to be as high or higher than some of Tesla’s models. This announcement not only gives Lucid bragging rights, it reveals a bit about the company’s strategy to offer a variety of versions of the Air sedan with prices ranging between $169,000 and $77,400.”

Here’s a good outline of Tesla vs. Lucid stock.

Also, with the Rivian IPO news, the LCID stock bulls are pointing at valuations arguing that LCID is cheap by comparison. 

The chart looks familiar.

What Does the LCID Stock Chart Say?

LCID Chart - Options Activity 091621

After the huge spike in February, the LCID stock has traded sideways between $17.50 and $30.00.  In fact, most of its trading days outside of February are in this range.

Keep an eye out on that 3-month low at $20.90. 

It broke in late-August and it’s likely an area of resistance along with the 50 and 200dma near $22.50.

The options volume today is mixed.

LCID Stock Options Volume

Unusual Options Activity Scanner LCID 091621

Unusual Options Activity in LCID stock is significant in the weeklies with the highest options volume concentrated in the September 17th $21 Calls.

On the flip side, this trade caught my eye and it’s worth a look…

The customer bought 10,000 LCID October 15th $17.50 Puts for $0.58 and sold 10,000 LCID October 15th $26.00 Calls at $0.48. They took in $0.10 on that trade.

This options flow likely indicates that someone is looking to hedge a large position at these levels.

If you want to catch up on the LCID stock story… Watch this Bull vs Bear outline.


UNUSUAL OPTIONS ACTIVITY WYNN STOCK

It’s not just LVS, it’s all of Macau. 

Unusual Options Activity WYNN 091621

Today, JPM downgraded the casinos with exposure to Macau:

“We are lowering our ratings on our 3 Macau SAR (special admin region) centric U.S. listed companies (LVS, MLCO and WYNN stock) to Neutral from Overweight following the Macau Government’s announcement to tighten its casino regulatory oversight… In short, we don’t like the uncertainty and opacity surrounding Macau and China policy, particularly after this announcement, and particularly at a time when the Macau government is encouraging (preferring/sort of requiring) further potential meaningful capex in Macau / Hengqin island as a consideration of a license renewal”

Take a look at this WYNN stock chart:

What Does the WYNN Stock Chart Say?

WYNN Chart - Options Activity 091621

That is some drop WYNN's stock price had this week.

$87 was a big level. $80 fills that gap from November.

And $70 is where the run started after the election.

The options flow is pointing in that direction and lower.

WYNN Stock Options Volume

Unusual Options Activity Scanner WYNN 091621

This morning, there was a Put buyer in the WYNN October 15th $70 Puts paying $1.30.

That’s a long way down, so it made me look.

Again, no one knows what China will do next. But, the bulls need a move back through that $87 level… soon.


UNUSUAL OPTIONS ACTIVITY AFRM STOCK

This Trend is Unstoppable Right Now!

Unusual Options Activity AFRM 091621

The buy now, pay later trend continues. Goldman Sachs made an announcement that they will buy Green Sky in a stock deal valued at $2.24 Billion. 

“Since its founding, GreenSky has provided simple and transparent home improvement financing solutions for approximately four million customers. GreenSky has a growing network of over 10,000 merchants and helps them accelerate their business by incorporating a seamless financing experience into their commerce flow. Aligning GreenSky’s unique capabilities and growing user base with the expanding products of Marcus by Goldman Sachs creates a compelling banking platform positioned for significant growth."

And AFRM stock, another “buy now, pay later" company, rides higher on the news.

What Does the AFRM Stock Chart Say?

AFRM Chart - Options Activity 091621

After the AMZN partnership news and the earnings blowout, AFRM stock continues to trade well on significant share volumes.

The high stock price seems to be the target.

The options flow shows that the Bulls are reaching for Call options as well…

AFRM Stock Options Volume

Unusual Options Activity Scanner AFRM 091621

The AFRM options weeklies are seeing significant Unusual Options Activity, some of which is rolling out to October. 

For instance, the AFRM October 15th $120 Calls are trading 5,000x near $10.00. 

Maybe not surprisingly, the RR$ for that purchase is around $143!

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Best,
Felix

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