Unusual Options Activity in PENN, BBY stock and PTON

November 4, 2021

AP Photo/Susan Walsh, File

Flattening yield curve chatter increasing because of a policy error.

Watch the banks here. Could they be turning?

Here are today's Top 3 UOA trades:


1. THIS Retailer is Trying to Breakout

2. Is the Market Souring on THIS Industry?

3. PTON Price Targets for Earnings

Find your own ideas with the Unusual Options Activity Scanner

Let’s get started...


THIS Retailer is Trying to Breakout

A few retail names have exploded recently. It appears as if a store’s online presence as part of an omnichannel strategy is becoming a deciding factor for investors.

BBY is firing on all cylinders there and showing some good momentum lately.

What Does the BBY Stock Chart Say?

BBY Chart - Options Activity 110421

BBY stock is up 20% in 4 weeks and now trying to break the high.

My gut says it takes a pause, but this market is max bullish so who knows.

The stock has spent the last year digesting the Covid move in 2020.

Also, notice the dotted lines that looks like an ascending flag.

BBY stock is above the 50 and 200dma, which have both converged. The MACD looks positive.

Bears will point to so-so volume, an overbought RSI, and a macro backdrop (i.e. supply chain) that may cause some holiday problems.

But the options market is pointing to more gains.

Options Activity in BBY Stock

Unusual Options Activity Scanner BBY 110421

There’s unusual options activity in BBY December options. Specifically, someone is taking some profits and selling their BBY December 17th $115-$125 call spreads 15,000x to buy another 15,000 of the BBY December 17th $130-$140 call spreads for about $3.20.

If you look at that top dotted line on the stock chart and extend it to December, you get close to $140. It appears that this buyer is bullish, looking for a breakout, but willing to let it go at that top of that range.

And if I had to guess, I would say he is likely lightening up on some stock. Why do I say that?

Paying $3.20 to make $6.80 is not a “great” Call Spread, which makes me think he wants to have something on while he takes some stock risk off. The risk he's taking off with the stock outweighs the poor risk-reward profile on that option.

Earnings are due in late-November.

Free Beginner Options Course - Mobile ad


Is the Market Souring on THIS Industry?

Casino and online apps

The online sports gambling space is taking a hit today. PENN is at the forefront down 17%.

MGM, CZR, and DKNG are all feeling the heat here.

Momentum and fantasy investing is easy when it goes up. But if you are new to the game, you can’t imagine how far these stocks can drop.

These stocks run into trouble when growth slows, which coincides with earnings not consistently beating estimates.

Look at PENN here after their earnings…

What Does the PENN Stock Chart Say?

PENN Chart - Options Activity 110421

PENN stock is breaching what could be considered the “line in the sand,” around $61.
Stock volume is strong today as investors “Sell Now, Ask Questions Later.”

The Bears have control here and are likely pressing with the stock breaking key levels and firmly below the 50 and 200dma. They will look for strong push back from a buyer.

The Bulls need a close above $61 today, which doesn’t seem likely.

There should be support for PENN stock in the low $50s, but the stock can unravel towards $40.

Keep an eye on where the key volume areas are in the stock (boxed in blue). It’s clear where most investors got in the name.

Options Activity in PENN Stock

Unusual Options Activity Scanner PENN 110421

The unusual options activity in PENN stock occurred early in the morning. There were buyers of the PENN November 5th $70 Calls with the stock down small on the open. These buyers were crushed.

By mid-morning, as the stock approached $61, the Put buyers were all over the $50, $55, and $60 Puts. Take a look at those Risk-Reward Breakeven Levels… $47.50 to $55.00.

Remember, a sportsbook has been around for decades. They all try to steal each other’s customers with better odds, matching deposits, parlays, etc. This makes it incredibly difficult to keep your customers long-term if you don’t match the other sportsbooks.

In a nutshell, that is a race to the bottom, which is exactly what happened to the live sportsbooks over the decades. Margins are close to 5%.

Anyways, DKNGs… You’re up next. Let’s see what you got.

I got a seat at the “$10 Club” for DKNG warmed up.

It will be waiting whenever it decides to join.

Sign up for the Options Trading Newsletter via email and receive a FREE 7-day Options Course.

Options Trading Quiz - Mobile ad


PTON Price Targets for Earnings

It feels like PTON is in a tough spot. They might be a victim of the huge demand they saw during the pandemic.

Not everyone can afford a $3,000 stationary bike. Or $2,000.

And it’s hard to swallow when similar bikes are going for $1,000 online, less (of course) the screen technology.

But anyone can add an iPad to their bike and get the same effect.

The Bulls will argue that the price of the product should be expensive if that’s the brand image of the company. I get it, Gucci exists because the brand image is strong.

The thing is Gucci doesn’t discount.

PTON dropped prices to get the bike at a point where they can better sell to the masses.

Their initial clientele who made PTON what it is today doesn’t like owning what the masses own.

Right, “but Felix it’s a subscription model, too!”

They have a huge competitor in their subscription/software model with AAPL, who just got a patent for its fitness app. I am not sure you want the best and biggest customer-facing software company trying to beat you with software and price.

The chart is having trouble.

What Does the PTON Stock Chart Say?

PTON Chart - Options Activity 110421

PTON stock rebounded from the Treadmill recall back in May. It bounced much higher off the $80 level than I thought it would.

From $80 to $130 back to $80 in early October is not necessarily inspiring.

The stock is under the 50 and 200dma.

A break down through $80 could cascade PTON down toward $60.

The Bulls need a good earnings report and a confident CEO presentation tonight. That should get the stock back above the 50dma to keep the bears honest.

Here’s how the options are setting up.

Options Activity in PTON Stock

Unusual Options Activity Scanner PTON 110421

First, at the top right you will see that Implied Volatility is High and the options market is leaning Bearish.

The Risk-Reward Breakeven Price in the middle of the unshaded range is hovering around $72 and $99, or about $13.50 down vs $12.50 up.

Calls vs Puts today are even.

Awhile back, PTON and LULU were both valued the same. I would always choose LULU there because it has history. And I said: “Why would a company buy PTON for $50 Billion, when you can buy their 20 top trainers for $50 million?”

Today, the company is $26.5BN and you could still get those trainers for maximum $50 million.

Yes, maybe PTON is the next LULU. But sometimes the “next-LULU” is simply ... LULU.

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

Now go make some money!



The Most Controversial Options Video

that the Experts Don't Want You to See!

Voted Top Presenter at the Benzinga Options Conference

Options Trading Tutorial - The Greeks Don't Matter




Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options involve risks and are not suitable for everyone. Prior to buying or selling options, an investor must receive a copy of Characteristics and Risks of Standardized Options. Copies may be obtained by contacting your broker, The Options Industry Council at One North Wacker Drive, Chicago, IL 60606.

Felix Frey and OptionsGeek, LLC. are not registered as an investment adviser nor a broker/dealer with either the U.S. Securities and Exchange Commission or any state securities regulatory authority. All users of this Content and/or website must determine for themselves what specific investments to make or not to make and are urged to consult with their own independent financial advisors with respect to any investment decision. The viewer bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. All opinions, analysis and information included on this Content and website are based on sources believed to be reliable and written or produced in good faith, but should be independently verified, and no representation or warranty of any kind, express or implied, is made, including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, Felix Frey and OptionsGeek, LLC. undertake no responsibility to notify such opinions, analysis or information or to keep such opinions, analysis, or information current. Also be aware that owners, employees, writers, or producers of and for OptionsGeek, LLC. may have long or short positions in securities that may be discussed in this Content or website. Felix Frey and OptionsGeek, LLC.and the principals and/or employees of OptionsGeek, LLC. may hold securities of companies mentioned in this Content. Neither Felix Frey nor OptionsGeek, LLC. is receiving any compensation from any company referenced in the Content. Past results are not indicative of future profits.