From Pharmacies to Cloud Software: Fighting Infectious Diseases in Yoga Pants
Notable Flow 9/12
Good afternoon, all. The flow is flowing, and the gains are gaining. We are an anabolic-free substack, yet our gains thrive with massive results! Beautiful combination. We’ve got a pretty good basket for you all today, so let’s take a look, shall we?
Notable Flow:
CVS 0.00%↑ 60C STO 10/18 Exp
MSFT 0.00%↑ 450C 03/21/2025 Exp
SMMT 0.00%↑ 30C STO 01/17/2025 Exp
LULU 0.00%↑ 290C STO 01/17/2025 Exp
CVS 0.00%↑ 60C STO 10/18 Exp.
Vol: 7,376 OI: 4,726 Avg: $1.08 Prem: $797,651
This whale is placing a bearish bet by selling calls on credit and trading 5k contracts at the Bid, which should be added to the existing OI. As the chart above shows, on the right side, the net call premium dropped while the calls were trading and remained negative for the day, while the net premium was neutral during the trading session.
CVS, as you are all familiar with, is one of the largest American healthcare companies involved in pharmacy services, retail pharmacy, and health insurance. Competition from Amazon's entry into pharmacy, drug pricing pressures, and regulatory risks are ongoing concerns. The company is also focusing on reducing its debt after the Aetna acquisition.
Seemingly a range trade the past few months, CVS remains within these boundaries, recently testing the range's low while trading below all relative moving averages that now act as resistance for the time being. It is plausible to assume the whale’s positioning is in hopes that it does reject these moving averages and retests the low range, possibly even breaking below. I noted that CVS now has competition from Amazon in the space. The weekly time frame better represents weakness and possible breakdown locations. However, I will pull the daily to show you the range and how it has acted thus far.
MSFT 0.00%↑ 450C 03/21/2025 Exp.
Vol: 10,828 OI: 4,106 Avg: $21.30 Prem: $23,059,887
Normally, we don’t give much attention to mega-caps flow, but we are making an exception today since it is very clean and significant. About 9.1k contracts were traded at the Ask for an underlying cost of $19.5 million. The chart below shows how the net premium has favored calls since September 9th.
Currently down ~10% from all-time highs, Microsoft seems to have found a base and looks to continue its momentum towards the upside as spooz reclaimed 5500 & 5550 major levels during yesterday’s (absurd) session. Sitting at a decent inflection point dating back to the recent breakout to ATHs, we sit just below this mark displayed by the yellow trendline. Supported by the 50wk MA from below and wedged under the 10/20wk MA’s from above, a break of these could trigger further upside in hopes of reaching nATH’s. The time frame the whale selected displays long-term confidence in the trade as we near the year's final stretch and into the end of Q1 ‘25.
SMMT 0.00%↑ 30C STO 01/17/2025 Exp.
Vol: 3,855 OI: 246 Avg: $2.34 Prem: $903,586
This whale is placing a bearish trade by opening 2,000 contracts on credit. The Bid action and the downside in the call net premium make us assume that the calls are being sold and not bought. The stock has been up 120% in the past five days and soared 21% today after raising $235 million in a private placement. It accepted offers from biotech institutional and individual investors to purchase an aggregate of about 10.4 million shares of its stock at about $22.70 a share.
Despite the news and the strength, this trader speculates that the stock price will come down or at least stay below $30 before the expiration.
A massive reaction to the news today from the previously mentioned private placement raise of $235M, this is a regression to the mean trade. No price action up here to chart from so all we can assume is that he will look to collect the premium from the reaction as it trades lower back to level’s of POC (point of control).
LULU 0.00%↑ 290C STO 01/17/2025 Exp.
Vol: 505 OI: 414 Avg: $14.15 Prem: $714,647
Similar to our post above, another trader speculates that the stock price will decrease or stay below $290 by expiration. This time, the Whale traded 500 contracts at the Bid, paying a total premium of $708k.
Down nearly ~50% YTD, this feels like shorting the hole to me personally. Major level of support at 245 here as we trade slightly above, yet Mr. Whale has no remorse for yoga pant season. LULU had a decent earnings report this previous quarter and seemed like it had the potential to finally be bottomed heading into the final stretch of the year. However his positioning is clear in the essence that they believe it can break below this level of support. Below all weekly moving average’s with the 10wk being the closest. This moving average as always acts as support/resistance, with this instance being resistance for the time being.
What a rally today! Those hammer candles ended up paying us nicely on spooz as we are currently testing 5600 today. Lots of bullish sentiment up here whereas everyone was bullish only a few days ago. Funny how that works, innit? As I was typing this outro, we just knifed 20 points LOL.
Hope you all enjoyed the information we covered today, as always likes are greatly appreciated. See you folks tomorrow for the week’s recap.
Cheers,
Dropping comment here to say thanks for all the market insights and flows you’ve been sharing. It’s been super helpful and really appreciated! Looking forward to more.