The 13Fs came out yesterday after the bell.
I always think it’s a good idea to look at the chess pieces being moved around by the biggest Hedge Fund Managers. Remember, the big reveal is a snapshot from 6 weeks ago and a lot can happen in 6 weeks.
Nonetheless, I think it's important.
I would start your homework HERE. It’s a great summary.
Let’s get into today’s 3 interesting trades:
UNUSUAL OPTIONS ACTIVITY
1. We Have a Runner!!! … Now What?
2. Repeat Put Buyer Getting Aggressive HERE!
3. Come On… Let a Put Playa Play!
Let’s get started...
UNUSUAL OPTIONS ACTIVITY PFE
We Have a Runner!!! … Now What?
That is some chart in PFE!
We highlighted the Unusual Options Activity in PFE Calls last week after laying it out for you in this podcast video. I’ve received several emails today questioning whether it’s time to bail. My answer is always some form of “I have no idea.”
What I do know is that we should not be as long as we were 3 weeks ago. Our PFE December $40 Calls reached over 350% today. You should have some exits there.
Do I think it goes higher?
This is a “runner” right now. So, yes.
Do I think it can pull back?
Of course, it can.
The breakout was around $40.50. It just hit $50.50 this morning before doing its U-turn. So, where can it pullback to?
If it pulls back, my guess is $45.50, the 50% retracement level from the break out.
Anything lower than $45.50 and either something went very wrong for the company or the buyers should be falling all over themselves to get in.
Call buying today is off the charts. There are big volumes dominated by Calls across all months to January. These September Calls stick out…
We are looking for a potential FDA announcement around that time.
Can these Call options be a risk-reward adjustment here?
Yes, absolutely. They could be buying Calls and getting rid of some stock. This doesn’t mean PFE can’t go to $60. It’s just prudent risk management. You take a little off the table on moves like this and keep some upside.
Winning Picks Premium Members are also long a stock with similar characteristics to what PFE looked like two months ago… Cheap, “no growth,” low P/E, but with potential that is underappreciated and should be unlocked in the near future. Stay tuned!
UNUSUAL OPTIONS ACTIVITY HPQ
Repeat Put Buyer Getting Aggressive HERE
Why are we coming back to this one? Because our Put buyer is coming back for more.
Recall last Thursday’s chart, up at $30+ we were near the top of this $27 - $31 range when he bought those puts. By Friday, the stock took a hit.
It’s now trading below the 50 dma. While we are now dead center in this range, it appears that last week’s Put Buyer isn’t done.
Today, a buyer walked in and bought 20k HPQ August 27th $30 Puts for $1.49 with the stock $29.15. Next week options because on August 26th the company reports earnings and tells us how great they performed (or didn’t perform).
Notice the RR$. They are targeting right around the bottom part of the range, hoping they get lucky and the stock breaks lower.
UNUSUAL OPTIONS ACTIVITY ARKK
Come On… Let a Put Playa Play!
The ARK Innovation ETF is basically a long list of stocks I’d like to be short. It’s hard making money buying stocks priced at 25x sales AND on the wrong side of “the mountain”… just really hard. This is ARKK’s Top 10 holdings:
Frankly, it’s also hard to buy puts on them because they are priced fairly high, forcing you to have a very low Target Stock Price, and your timing has to be exact.
The ARKK chart looks awful.
The ETF is once again below its 50 and 200dma. It failed to make a new high 2 weeks ago and has now broken this wedge to the downside.
I think you catch a bid near $107-108. If not, a $97-retest might be in the cards. Bulls need to hold this $115 range for a small win.
That said… Put activity in September has been active over the last week. Today is no different.
You can spot where the players are at.
And keep an eye on that $115 Open Interest.
Also, keep an eye on this developing story…
Michael Burry (from “The Big Short”) files his 13F and reveals he is short ARKK with Puts.
Cathie Wood, maybe feeling the heavy pressure of underperforming badly this year, responded:
“To his credit, Michael Burry made a great call based on fundamentals and recognised the calamity brewing in the housing-mortgage market. I do not believe that he understands the fundamentals that are creating explosive growth and investment opportunities in the innovation space,” the billionaire investor posted on Twitter.
Meow!!!!
Now go make some money!
Best,
Felix
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