Unusual Options Activity in TSM, JWN, and AMC

August 25, 2021

Avoiding Mines

Today is a good example of the craziness we witness in the market and the minds we try to navigate. 

Great earnings and the stock gets killed.

No earnings and the market thinks it will triple in 3 weeks!

Producer Prices on the Rise and that’s good until they tell us that Producer Prices rising is really bad.

Here’s today’s 3 interesting Unusual Options Activity:

UNUSUAL OPTIONS ACTIVITY

1. Earnings Beat Expectations & Stock Down Huge? 

2. Can THIS Stock Triple in 3 weeks! 

3. Raising Prices is Good For Them, How ‘Bout Us?

Let’s get started...


UNUSUAL OPTIONS ACTIVITY JWN

Earnings Beat Expectations & Stock Down Huge? 

Nordstrom JWN Unusual Options Activity

Nordstrom (JWN) reported earnings last night that exceeded the printed earnings expectations. The problem seems to be that the Macy’s report caused JWN’s expectations to rise ahead of the number. 

It didn’t help to get a JPM downgrade this morning, essentially saying the top is in for JWN:

“With the current backdrop potentially ‘as good as it gets’ for both JWN’s $100K+ core household income customer (w/ mid-teens personal savings rate, debt service ratio at 40-yr lows, and US household wealth creation of +$12T in 2020) and on the pricing/promotional front (lean channel inventory / industry AUR expansion) – JWN’s absolute and relative performance remains underwhelming.”

The stock was up 5% after the print.

Then down 20% this morning.

And quickly approaching a dangerous level in the stock…

JWN Stock Chart 082521

Over the last 6 months, the stock’s been digesting that huge rally from $12 to $46. The end of the year trading around $30-$31 provides some support, which did its job in July. 

If it breaks there should be good support near the $24-$25 level.

Someone’s not so sure it will hold this level going forward…

JWN Unusual Options Activity 082521

A buyer stepped in for 7k JWN September 17th $30 Puts, paying around $1.25. The RR$ is $27.16. If you stick in $26 as the Target Stock Price, the pointer pops up on the $30s, which fits the narrative of the next support level I mentioned above. 

Keep in mind, the company is family owned and if it gets too low you will likely hear rumblings of taking JWN private.


UNUSUAL OPTIONS ACTIVITY AMC

Can THIS Stock Triple in 3 weeks! 

AMC Unusual Options Activity 082521

Here we go again… 

AMC took off yesterday with several other meme stocks. You know what else took off?

Implied Volatilities made a sharp move higher with relentless Call buying yesterday and again today.

I can’t find any real news moving the stock/options like this. And the reality is this isn’t trading on traditional fundamentals. 

What I do see is this…

AMC Stock Chart 082521

The stock looks like it broke that large flag it built over the last 3 months. It’s even recaptured the 50 dma and the MACD is starting to gain speed on the upside.

So, how high can it go?

You won’t believe what the options are saying!

AMC Unusual Options Activity 082521

There is a large buyer of the $145 Calls today, paying as much as $2.70. 

Yes, the $145 Calls! And there's 68k open interest there!?!? 

I had to triple check my screens to make sure the stock was $46 and they were paying over $2 for the $145.

The only thing I can think of is that Citadel spends $5mm to buy those, and then makes $100mm selling everyone options around the $40-$60 range.

Or, someone has insight on the mother of all squeezes coming.

That said, I like the AMC September 17th $100-$145 Call spread for $1.

Or even better, if you own the stock, then the AMC September 17th $80 -$145 1x2 Call Spreads (Buy the $80s /Sell the $145s) for $0.00.


UNUSUAL OPTIONS ACTIVITY TSM

Raising Prices is Good For Them, How ‘Bout Us?

TSM Unusual Options Activity 082521

https://seekingalpha.com/news/3733888-tsmc-stock-gains-on-reported-plans-to-raise-prices-by-up-to-20 

Taiwan Semiconductor (TSM), the world’s largest independent semiconductor foundry, is raising prices on their chips

DigiTimes sources say the foundry has notified clients about a 10% price hike for the mature, sub-16 nanometer process manufacturing. Advanced processes of 16nm and above could see price increases of up to 20%.

This is clearly material information for the stock, and certainly came just in time … 

TSM Stock Chart 082521

The stock was hitting the lower levels of its range and leaning on support.

You know who had better timing?

TSM Unusual Options Activity 082521

Yesterday, someone bought 10k TSM September 17th $119 Calls for $0.77. 

Today, they’re trading at $2.50. Not bad for a day’s work.

It appears that a certain someone sold 1/3 today a $2.25 and rolled to the TSM September 17th $125 Calls for $0.85.

I wonder if everyone got “notified” of this material information at the same time???

But more importantly, in the digital age, chips are inside almost everything non-edible.

If you raise prices on the parts located inside “everything” then what do you think happens to the end-product prices for everyone?

At some point this inflation issue matters.

Until then, in the eloquent words of Jim Cramer… buy, buy, buy!


Now go make some money!

Best,
Felix

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