Another Day of Fintech Bulls
Notable Flow 11/18
Good morning all! Lots of loud noise on twitter surrounding the market this week already as some argue the indices have a bad look to them while others argue they held where they needed to, and that the pullback was healthy & necessary for continued upside in the weeks ahead to close out the year.
Last night SMCI 0.00%↑ filed their compliance plan to the Nasdaq in hopes of buying them some time to get their ducks in a row to avoid being delisted as they face accounting fraud accusations for the second time in company history. The stock surged off this filing currently up 25% pre-market at the time of writing.
Notable Flow:
AFRM 0.00%↑ 70C 12/06 Exp
HOOD 0.00%↑ 47C 02/21/2025 Exp
APLD 0.00%↑ Call Debit Spread: 11C BTO & 12C STO 12/20 Exp
AFRM 0.00%↑ 70C 12/06 Exp
Vol: 3,407 OI: 318 Avg: $2.18 Prem: $741,986
Shares surged almost 10% today after Barclays increased its price target to $64.00 from $54.00 per share. Additionally, whales opened 65C 11/22 Exp, paying almost $2 million for 29k contracts, which is significant considering the contracts expire in 4 days. They are still holding at a 120% gain.
Buy Now Pay Later a surging theme this time of the year for a few reasons. You’ve got Black Friday, and holiday shopping. In a time where money can be tight, most people elect to punt on 0% interest monthly payments by using AFRM SQ and other platforms. I did not include the strikes and expirations on this chart as there are many.
I’m going to show the weekly chart first here just to display the move we saw last year. As you can see, from Oct 30th to the end of December, the asset increased by 218%. We are in that time frame again and have already increased 53% the previous 2.5 weeks.
Now, in regards to entry. Yes you may say, it already ran, it already made the move, these guys are already paid etc. But there is a bigger picture trade here as shown above. Max strike calls for each expiration have been getting lit up on the chain for the past month it seems like. Ranging from 75s in Jan to 85s in Feb, the flow has been relentless.
Looking at the daily chart, you are essentially buying the flag breakout off the 10DMA. During Friday’s session, we backtested the pivot level of 51.50 ultimately holding that and the 10DMA alike before closing just above the trendline shown below. Breakout buyers and fomo buyers alike will inevitably chase this trade/theme pushing price action higher as the theme grows stronger into EOY. Dips are likely to be eaten and our first target from a chart standpoint seems to be around that 70 area as it was a large resistance level back in 2021-2022.
HOOD 0.00%↑ 47C 02/21/2025 Exp
Vol: 2,108 OI: 33 Avg: $1.50 Prem: $315,304
A chain that is only 3 strikes away from the maximum strike of 50 had no OI last week and only 33 OI today. It had a spike of 2.1k contracts traded with 1.9k contacts at the Ask. The call net premium reached its highest level in the past 14 days. Shares surged today after Pipe Sandler upgraded the stock to “Buy” and raised its price target to $36.00/share from $30.00/share.
Pretty wild chart from HOOD on the weekly displaying a massive rounded base and flag breakout a few weeks previous. The initial reaction on their earnings was negative causing many investors to either stop out, or punt on the trade. However, momentum was reclaimed and has continued to breakout into the IPO base of 35. This is a notable level and should be on most traders charts IMO.
I’ve also pulled the daily chart shown below to display the flag break from the latest gap up right into that 35 handle and closing right on it Monday at close. This is in continuation territory now after a stage 1 base break earlier in the fall. If all maintains course with the broader market and FinTech’s resilient strength and momentum, HOOD could be a leader. They have implemented tons of changes in regards to new UI and features on their platform driving investors to move over from competitors such as Schwab/Fidelity.
It is imperative that gap holds for long term swings.
APLD 0.00%↑ Call Debit Spread: 11C BTO & 12C STO 12/20 Exp
This was labeled as a floor trade, meaning it took place on an exchange's floor. Over 8k contracts were traded on both chains, paying $0.17 per contract for a total cost of $132,030. If this trade works, the Whale can have a maximum profit of $0.83 per contract.
Breaking the long term downtrend from Summer of 2023 and forming yet another flag in search of another break to the upside, this is where we sit at now. Looking at the moving average’s we notice a few things. APLD has reclaimed ALL weekly averages, the 10 has crossed the 200, and they are all relatively flat outside of the 10. This means that not only is the stock tight and not extended, but that a bigger move can come any moment.
Earlier this year, NVDA announced that APLD would be one of the first cloud platform services to use the new Blackwell chip which was big news for bulls when it came to light. Just the other week, NVDA also announced they increased their stake in APLD. NVDA reports ER TOMORROW. Little bit of a gamble I’d like to think as the time behind this trade isn’t far too great, yet brings some intriguing volatility to the basket.
As shown below and previously mentioned, the weekly displays another flag forming relatively tight below that resistance level of 8.25. Failing a few times in the past above this mark, some strength on good news could trigger further upside above the range (10.10 break) and move towards this whales strike of 11 while selling the 12s against.
Thanks for joining us today in our relatively small-cap basket. We hope you enjoyed the read and look forward to hearing from you all in the comments or chat.
Cheers,
Kian, Jersace, & Jon