Unusual Options Activity in PTON stock, DIS and WMT

February 7, 2022


Good article I read in Barron's this weekend on insider trading.

When I tell people stories or the many different ways insider trading is done, it almost sounds unbelievable.

But I assure you, criminals are always thinking and looking for the weak link.

"Two indictments unsealed Dec. 20 in Boston’s federal court allege that a group led by a Russian cybersecurity executive stole early looks at unannounced earnings—making over $82 million trading ahead of unreleased announcements from Tesla (ticker: TSLA), Microsoft (MSFT), IBM (IBM), and over 165 other companies. But Vladislav Klyushin and his four co-defendants aren’t alleged to have hacked those companies. Instead, prosecutors charge that the hackers targeted a little-known choke point for market-moving information: two firms that thousands of public companies use to make electronic filings with the U.S. Securities and Exchange Commission."

Years of inside information and $82 million in profits just from them!

If you think that info didn't make it to others, you are too naive.

I haven't read the indictments yet but I suspect you will find A LOT of options trading there.

Here are today's Top 3:


1. Playing DIS Long Into Earnings

2. Can WMT Get Crushed on Earnings?

3. THIS is the Probability of a PTON Deal?

Let’s get started...


Playing DIS Long Into Earnings

Credit Suisse kept an outperform rating on shares of Disney ahead of earnings later this week. The firm said investors will be watching the company’s progress on streaming growth.

“Structural streaming concerns also remain top of mind, including whether Disney+ can develop content to broaden out beyond its Disney/Marvel/Star Wars fan base and if Netflix’s slow growth patch suggests a corollary lesser streaming TAM/margin outlook for its competitors, like Disney+.”

Stock has been beaten up pretty good on subscription data. Take a look.

What Does the DIS Stock Chart Say?

DIS Chart - Options Activity 020722

The market has given us the immediate range in DIS stock - $128 to $160.

It’s under the 50 and 200dma, which adds pressure above.

The good news is this possible MACD diversion over the last 2 months. In addition, volume was less on the second dip lower.

The Bulls want to see a better report than the last time to get it above the 50dma, hold, and then aim for that important $160 level.
If not, the bears will press it toward $128 again.

The longer DIS stock stays at these levels the more pressure it will assume as the 200dma starts to turn lower.

Options Activity in DIS Stock

Unusual Options Activity Scanner DIS 020722

With DIS earnings due on Thursday, February 9th, there is upside call buying across the expirations.

The DIS February 11th $142 Straddle is priced near $9.75, making the breakevens $132.25 - $151.75. The 1-standard deviation range is $129.75 - $154.25, which is more than 8.5%.

 If you like the stock and want to own it lower but want some upside, then this trade looks interesting:

Sell 1 DIS March $125 Puts $2.10
Buy 1 DIS March $145-$155 Call Spread for $3.30.
Net premium = $1.20  

This gives you 8 to 1 leverage to the upside for taking the risk to own the stock at $125.

Pick the Right Option


Can WMT Get Crushed on Earnings?

Unusual Options Activity WMT 101921

Morgan Stanley kept its overweight rating on the big-box retailer. The firm said its recent survey checks show that Walmart+ continues to gain members.

“Latest AlphaWise data shows Walmart+ membership continues to increase, with ~15m members total (~12% household penetration) & ~1m net members added in the past quarter.”

I generally like WMT into a recession, but this chart looks interesting.

What Does the WMT Stock Chart Say?

WMT Chart - Options Activity 020722

WMT stock has been in a range between $134 to $152 for almost a year.

But it looks like it is having some trouble here.

You can see that the 50 and 200dma rejected the stock last week. Keep in mind the 50dma is also crossing the 200dma with a longer tail, which makes it look like it’s rolling over.

There are also several lower highs made on every bounce since Novemeber.

A break of $134 with volume, can see WMT stock drop toward the last support zone at $125 last March.

Options Activity in WMT Stock

Unusual Options Activity Scanner WMT 020722

WMT earnings are due out next week.

The WMT $138 February 18th Straddle is near $6.25.

The 1-standard deviation range is between $130.25 - $145.75.

I don’t think the market is pricing in a potential gap lower if WMT earnings are poor and the market decides to give up on the stock.

Put Spreads are also priced in your favor if you want them.

Just something to consider.

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THIS is the Probability of a PTON Deal?

PTON Unusual Options Activity 090921

So, everyone wants PTON now?

This is how it works…

The big boys wait until these stocks get crushed on valuation then buy them on the “cheap.”

$12Bn is a drop in the bucket for the likes of AMZN, NKE, AAPL, etc.

But the only question is whether or not the big boys could replicate it on their own.

From the podcast days, you know I’ve been negative on PTON for just that question.

People riding bikes tend to follow their bike guru, that’s why bike classes at your gym are packed for one teacher and a ghost town for others.

So, how much would it take to hire the top 20 PTON bike gurus?

It ain’t $12Bn that’s for sure.  

What Does the PTON Stock Chart Say?

PTON Chart - Options Activity 020722

With takeout rumors in the name, technical aren’t going to matter much.

What matters for PTON holders is that someone shows a bid and lets the market know that there is $12Bn of value here.

No bid and we can easily see the teens.

Options Activity in PTON Stock

Unusual Options Activity Scanner PTON 020722

The PTON options are telling an interesting story as well.

If you look at the long-term options (2024), notice that the IV is down while the near-term options are higher.

This is because if AMZN buys PTON, then consider what happens to those options.

  • If it’s bought for cash, then the IV will get crushed toward 0.
  • If it’s bought for AMZN stock, then the PTON IV will reflect AMZN IV, which is 31%.
  • If there’s no deal, then PTON 2024 IV goes back to 72-75%.

Map all that out and you probably get a 35-40% chance of a deal.

Interesting, right?

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