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Bid, Bid, Bid… This market doesn’t stop. We get the FOMC Minutes on Wednesday, and you know the saying: “Don’t Fight the Fed!”
That said, what about this China news?
They shut down (now only partially shutdown) the 3rd busiest port IN THE WORLD because 1 person working at the port caught the Delta Variant. I am still trying to wrap my head around what might happen next!?!
With seemingly every supply chain tied somehow to China, this risk is underappreciated. Maybe not for this week, but I suspect sooner than you might think. Keep an eye on China’s zero-tolerance policy for Covid-19.
It doesn’t matter, it doesn’t matter, then one day it suddenly matters.
Now, here's 3 interesting trades happening today:
UNUSUAL OPTIONS ACTIVITY
1. More Downside in THIS Stock Next Week?!
2. This Online Dating Company is a BUY right HERE!
3. Will THIS Archegos Name Make a Comeback?
Let’s get started...
UNUSUAL OPTIONS ACTIVITY MU
More Downside in THIS Stock Next Week?!
On Thursday, I left you to think about these semiconductors. I specifically showed you MU and a related HPQ Put buyer. HPQ didn’t disappoint on Friday.
The story here is “oversupply” of DRAM chips. Evercore ISI came out on Friday and reiterated their Outperformance on MU, but lowered their Price Target to $100 from $135. That’s good, but why is the stock still trading awful?
It can’t get off the ground. Then, this morning a large Put buyer decided today was a good day to press MU lower…
The buyer bought 12,000 MU August 27th $67 Puts for approximately $0.60. Look at the RR$... $64.30!
I threw in Target Stock Price to see if I could get the pointer there and determine what type of Price Target they’re looking for.
$63 did the trick. Now, can I get to $63 on the chart?
The stock broke $75 which was a decent support level. Bulls want to see it climb back above that level. The Bears are looking at the next support near… hmmm, $62. You see how that works.
Also, if I take the move from the $97 high to around $76, I get $21. Take the $21 off that $85 level and I get $64… close enough.
Is MU about to take another dump? If so, where will the market need to be with a lead semiconductor crashing?
UNUSUAL OPTIONS ACTIVITY MTCH
This Online Dating Company is a BUY right HERE!
These online dating sites make a mint on a bad day. Last year, when everyone was stuck at home looking for social interaction, MTCH made a small fortune.
Look at the stock….
$50 to $175 in 8 months. It’s spent the last 6 months digesting that move between $175 and $130. The stock is coming off a sharp move lower over the last 2 weeks. We’re now dangerously close to that support level.
And what do we see today?
Likely from a large, long-term holder who wants a “free dividend” for taking the risk to own the stock at $115. This morning a large customer sold 30,000 MTCH September $115 Puts at $1.02.
Essentially, the Put Seller is saying very loudly… “If it comes down to $115 over the next 4 weeks, I am a Buyer of 3 million shares.”
I suspect he’ll also be buying a lot of stock down there in addition to the 3 million shares from the options.
While we usually look for Buyers of options to follow along, we analyze ALL Unusual Options Activity to get information we can use at a later date.
This is one of those times.
UNUSUAL OPTIONS ACTIVITY VIAC
Will THIS Archegos Name Make a Comeback?
Viacom’s (VIAC) Paramount+ is on fire. The stock … not so much. Will that change?
Here’s a quick take from Forbes on the company’s recent earnings report:
“One highlight of the report is global streaming revenue that increased 92% year-on-year. The company added 6.5 million streaming subscribers to bring its total to 42 million. That resulted in an 82% y-o-y increase in streaming subscription revenue, largely driven by its Paramount Plus service. Streaming advertising revenue was up 102%, driven by its ad-supported Pluto TV service, which has more than doubled its revenue for four straight quarters. Total revenue increased 8% to $6.56 billion, while diluted earnings per share more than doubled to $1.50 compared to the previous year period.”
2021 has been a wild one for VIAC…
The stock was at the center of the Archegos blow up. In fact, it was VIAC’s $3Bn secondary after the close on March 22nd that started the demise from $100 to around $36 where it has found some support. There’s clear resistance at $47.50.
Today, someone rolled their September Call Spreads “down and out” to December Call Spreads.
Specifically, they sold out their September $44-$55 Call Spreads 10k at $0.25. They then bought 7,500 VIAC December $42.50 - $60 Calls for $1.81 ($2.16 and $0.35).
This is one of those situations where we see a Call Spread buyer. But it isn’t a bad idea here because the buyer is still looking at an ~8.5 to 1 payout. The buyer is also aware that all the “buy-the-pain” Hedge Funds will likely be sellers as the stock goes higher, slowing down any move. Here’s just one example of someone giving up on the name.
Now go make some money!
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