SOFI, UPST, SQ Unusual Options Activity

August 11, 2021

What is Fintech?

Banks are trading well again, as it seems like interest rates have made a small turn. When the banks do well, you must refocus on the Fintech names. 

Remember, most of these smaller fintech companies are created with the idea of getting bought out by a larger bank. It’s a good part of the reason for their sky-high valuations.

The question is at what price do the banks care and can they accomplish the same on their own.

Here’s 3 fintechs with Unusual Options Activity trading today…


1. It’s Incredible that THIS is “New”…

2. Using AI to Build the Best Mousetrap 

3. “Everyday” Call Buying Continues HERE

Let’s get started...


It’s Incredible that THIS is “New”…

SOFI Trade Idea 08 11

Sofi, the mobile-first finance app backed Chamath Palihapitiya, reports earnings tomorrow after the close. The Market is expecting about a 10% move. What’s surprises me when I look at this

$13.2Bn company with its lofty valuation, is that it’s so simple! Not that simple and useful isn’t genius. It’s just that how have the banks not done this? Couldn’t they quickly take all of their products and make this????

The stock has had a wild run up and down between $15 and $25 since January…

SOFI Stock Chart 081121

$15 is a clear support level on the stock. I would say dangerously close.  And maybe too close for the buyer of these Calls:

SOFI Unusual Options Activity 081121

There’s a buyer of about 10k SOFI October $17.50 Calls. Looks like a Target Stock Price at $25 gets him some edge. $25 also happens to be the top of that range. I just still can’t get over how simple this app is… 

But if they get enough customers, simple is going to be worth A LOT when a big bank takes them out. 


Using AI to Build the Best Mousetrap 

UPST Trade Idea 081121

Upstart (UPST) is another fintech company to watch. Earnings yesterday were very strong (transcript here). It appears they found the secret sauce to lending. 

UPST uses AI to help banks offer personal loans at lower rates to the customer with better default rates for the bank. Everyone wins, including UPST who owns the mousetrap. Now, they’re making moves into the auto loan business, which is another huge market.

I think this is a good quick interview Cramer did with the CEO back in March:

“We’re not a lender ourselves. We partner with banks who want to have better, more effective, more inclusive, and more profitable consumer lending offerings. That means we don’t take credit risk ourselves; we provide the technology to these banks for fees.”

The stock gapped higher today on the earnings, but it’s been all over the place…

UPST Stock Chart 081121

… $85 to $190 over the last 6 months, up and down 3x. It’s clearly difficult to value these fintech companies. And when you get these gaps higher, investors always go reaching for calls. 

UPST Unusual Options Activity 081121

Today was no different. The August calls for this week and next week were well bid this morning as investors are looking for a jump toward $200. 

But, here’s the issue with this company: They have a high concentration of customers. In fact, one customer accounts for over 60% of loans AND revenues. They might have a mousetrap that works but they need more customers for Wall Street to get on board.


“Everyday” Call Buying Continues HERE

SQ Trade Idea 081121

Without fail, SQ has had front month call buying every day for almost 3 weeks now. In that timeframe we’ve gotten a huge run with great earnings and a deal to buy Afterpay. What else is there? 

The stock is near the highs of its range…

SQ Stock Chart 081121

And like the other fintechs, quite the range between $185 and $285 since November. The 50 and 200dma look positive and the MACD is trending higher. While it seems to be having a little trouble up here, it’s digesting the recent pop fairly well.

SQ Unusual Options Activity 081121

The options trades in the weeklies are looking for a test of those highs. There’s decent activity in the $275 Calls up to the $285 Calls for Friday’s expiration. From the above chart, I want you to see the August 20th (next week) $300 Calls… they’ve traded 13,000x, ranging from $0.78 to $2.12. The RR$ is $311.  

That’s some heckuva move! But if you get a $285 breakout, it can get there in a hurry. That said, I’d rather play the SQ August 20th $285-300 Call Spread for $2.00.

Now go make some money!



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