From Trading Screens to Bulk Beans: Stock Market Refugees Hit Wholesale Wonderland
Notable Flow 8/27
Welcome back citizens of the FlowPublic, today we return from our very long (24 hour) hiatus of lackluster flow to remind you, that yes, we still exist. Although it is a relatively light basket as the market awaits NVDA 0.00%↑ earnings this week, we found a few diamonds (hopefully) in the rough.
Shall we?
Notable Flow:
COST 0.00%↑ 1100C 12/20 Exp.
SE 0.00%↑ Bearish Risk Reversal 77.5P BTO & 90C STO 12/20 Exp.
APO 0.00%↑ 114C 09/13 Exp.
BILL 0.00%↑ 60C 10/18 Exp.
COST 0.00%↑ 1100C 12/20 Exp.
Vol: 1,175 OI: 79 Avg: $5.25 Prem: $616,329
This Whale is taking a bullish bet by buying calls on a strike that is 21% OTM. It is taking over almost all the daily volume in this chain by trading nearly 1k contracts at the Ask. There was another flow with a shorter expiration: 1050C 10/18 over 3k contracts traded at the Ask and a total daily premium of $963k.
Costco will report its August Sales Results on 09/05/2024 and its Q4 2024 Earnings Results on 09/26/2024. Both calls cover these events.
CHICKEN BAKES AND DOUBLE CHOCOLATE CHUNK COOKIES!!
Is it possible this influencer/TikTok family has generated Quarterly revenue boosts for the wholesale giant? Possible, yet highly unlikely. They sure are entertaining while they epitomize the American overweight culture… Speaking of overweight, this whale is expecting a continued run up as Costco repeatedly makes ATH’s surging over 38% YTD.
The chart is a thing of beauty truly. Below I have the weekly chart pulled as this flow is a bit further out so it’s better to match time frames with what the whales are potentially seeing. I noticed that it typically reacts incredibly well to tests of the 20wk MA (Green Line) and generally does not trade below. In fact, the last time COST 0.00%↑ traded below the 20wk was back in October of 2023 and even then, reclaimed the very next week. Also shown, a falling wedge into that very spot… yes, the 20wk MA. In terms of chasing, it has increased slightly over 14% since this 20wk touch a month ago, yet we also notice that it has broken the previous ATH resistance of 885 depicted by the ray line correlated to the top of the wedge.
SE 0.00%↑ Bearish Risk Reversal 77.5P BTO & 90C STO 12/20 Exp.
Buying the 77.5P for $509k and selling the 90C for $528k. 950 contracts on both chains.
This whale speculates that the stock price will decrease and volatility will remain the same or increase.
The Net premium chart (below) reflects a downside movement on calls (negative) and an upside movement on puts (positive), which confirms the direction of the trade.
The stock is up over 50% since its August lows after the company announced its 2024 Q2 Earnings on 08/13. The company reported a 33.7% (YoY) growth in E-commerce GAAP revenue, 39.5% (YoY) growth in Digital Financial Services, and 21.1% (YoY) growth in Digital Entertainment Bookings.
For me personally, this just seems like a range trade short bet. Sea Limited has not traded above 90.00 since August 2022 and even then, was only a few handles above (93 and change). Floating in this level now, the upper section of the mentioned range, it seems as though the whale is making an educated gamble that it once again rejects these prices leaking lower towards his strike of 77.5.
APO 0.00%↑ 114C 09/13 Exp.
Vol: 1,130 OI: 2 Avg: $2.82 Prem: $318,926
This trade was placed by a floor trader, meaning it happened on the floor of an exchange. There was also action on the 115C 09/20, with about 1k contracts traded at the Bid. Since the OI was 5k on that chain, it is hard to tell if they were opened or closed, our guess is a partial close, but OI will confirm tomorrow.
Nothing about this chart excites me personally. Buying ITM calls, and hoping for continued upside after seeing a 20% rally from Aug 5th lows while coming into the balance of the previous range with an overhead 50D MA just doesn’t appeal to me. However, that isn’t what I’m here to do. This guy on the other hand, loves it. I’d say his risk is relatively defined with the 10DMA acting as his risk around 110.5 and near term resistance being that previously mentioned 50DMA at 115 and change.
BILL 0.00%↑ 60C 10/18 Exp.
Vol: 2,729 OI: 220 Avg: $1.47 Prem: $400,640
The stock is up almost 6% today after the CEO and CFO bought shares worth $3.1 million. This Whale speculates that the move up will continue by buying 13% OTM calls. The Net premium chart (top right) reflects a big spike on the call side today, while puts did not see much action.
Daily chart is not too shabby, but not the prettiest either. Today it reclaimed all relative short term moving averages (10, 20, 50) on news of the insider buys and currently sits up nearly 6% at the time of writing this. We see that it is pushing up against and even shortly traded above this downtrend trendline from mid February earlier this year but failed to hold above for now. The whale is hoping to break this with strength and surge another 13% in a short matter of time. Will be interesting to follow and see if there is any weight behind those insider buys in the long term.
That’s it for today. Personally, the Costco flow was the most appealing to me and found very interesting. Not a whole lot of flow this week so far, but I anticipate things will change, and quickly, post Nvidia earnings. Let us know what you’d like to see from us in the comments below, or come chat with us in our subscriber chat! Thanks for reading and likes are always appreciated.
Much love,