Good afternoon all - pretty choppy day in the markets today as we inch closer to Jackson Hole at the end of this week when everyone suddenly becomes macro experts… Let’s dive into the basket for today which includes a good bit of long term ideas.
Notable Flow:
HD 0.00%↑ 450C 01/17/2025 Exp
X 0.00%↑ 43C 01/17/2025 Exp
IRM 0.00%↑ 115C STO (Sell To Open) 10/18 Exp
BMRN 0.00%↑ 105C 01/17/2025 Exp
CRBP 0.00%↑ 70C STO (Sell To Open) 11/15
GDS 0.00%↑ 10C for 9/20 rolled to 15C 1/17/2025 Exp
HD 450C 01/17/2025 Exp
Vol: 1,231 OI: 432 Avg: $0.97 Prem: $119,541
This Whale purchased over 1k contracts at the Ask on this particular chain which is 23% OTM (Out The Money). By adding longer expiration they are covering the company’s next Earnings report on 11/12/24. Below we can see the details of this trade, which took almost all the daily volume of this chain.
Additionality, there was unusual activity for other chains with shorter expiration such as the 400C, 405C, and 410C all with a 10/18 Exp. causing a big spike in the Net Call Premium.
There was a decrease in the IV (Implied Volatility) regarding the 410C which could be assumed as some selling, but the best thing to do is to check OI (Open Interest) tomorrow.
Decent chart here as we see a weekly cup + handle with current price pushing into the top of the handle trendline ready to attempt a breakout towards the 396 mark correlating to the top of the handle’s action. As you can see we have increasing value on the moving averages indicating further upside if the market cooperates. The stock has been pretty steady choppy YTD yet is currently just over 10% increase thus far. The strike chosen is very much so OTM and above ATH’s of 420 and change.
The company has been impacted by a softening consumer demand environment, particularly in big-ticket items, as higher interest rates and economic uncertainty have made consumers more hesitant to spend on home improvement projects. Albeit, analyst sentiment remains generally positive.
X 43C 01/17/2025 Exp
Vol: 8,262 OI: 5,165 Avg: $3.58 Prem: $2,954,231
Another unusual flow with a 2025 Exp. This chain already had 5k OI, meaning there were 5k contracts opened and it seems like another 8k are being added on top of that. If so, `by tomorrow 8/21 OI should update and be somewhere around 12k.
The stock has dropped 11% since last Thursday 8/15, after Donald Trump announced he would block the Nippon Steel deal. This flow covers the US Elections’ date so it could be a speculative trade.
Steel manufacturing has been an interesting trade for years now with production issues due to COVID-19 back in 2019 causing a ripple in the industry across the board whether it was cars or construction. We saw price increases of incredible volatility as well as price decreases towards the mean as of late thankfully.
The chart itself is not ideal as it sits atop a trendline from May ‘22 and seemingly going to close today’s action below the 10/20/50 week moving averages. The strike chosen correlates to the resistance level of 43 overhead. Mr. Whale is hoping for a bounce off this trendline and a retest of aforementioned levels.
IRM 115C STO (Sell To Open) 10/18 Exp
Vol: 2,032 OI: 391 Avg: $2.00 Prem: $406,401
Our Whale friend is placing a Bearish trade by Selling Calls, a friendly reminder:
Calls BTO (Buy to Open) = Bullish
Calls STO (Sell to Open) = Bearish
Puts BTO (Buy to Open) = Bearish
Puts STO (Sell to Open) = Bullish
This is a ticker that does not get a lot of Options’ volume, making this trade interesting. We were able to assume that the Calls were being sold by looking at the Bid action and the Net Call premium dropping. The low OI of 391 compared to the 2k volume helped us confirm that the trade was being Opened and not Closed.
What seems to be a steady growing asset in this market as it has increased slightly over 60% YTD sees an unusual purchase of options flow as we note the call selling overhead ATH’s as the whale is betting it does not see levels of 115 or greater by expiration. Possibly a mean reversion trade expecting a pullback as it has tested that 110 spot multiple times now over the past three weeks failing to crack it with strength.
BMRN 105C 01/17/2025 Exp
Vol: 1,423 OI: 513 Avg: $3.23 Prem: $459,938
This particular trade was labeled as a Floor Trade meaning, that it was executed from the floor of an exchange. The total daily Volume on this trade was about 1.4k with 1k being a part of a single trade.
The stock has ran about 18% since its Earnings on 08/05 when it announced record revenue growth in the 2024 Q2 and increased its full-year 2024 guidance.
Additionally, the company is having its Investor Day on September 04, 2024. BioMarin has been drawing attention recently, especially after a series of analyst upgrades and solid financial performance in the second quarter of 2024. The stock received an upgrade from Bernstein, which raised its rating to "Outperform" and increased the price target to $110 from $94. This upgrade is primarily driven by optimism around BioMarin's drug Voxzogo, which is projected to exceed market expectations with peak sales potentially reaching $2.4 billion.
Showing a recent breakout from some downwards pressure since January by way of their earnings report as we previously stated, the stock has some overhead resistance shown in the chart below. Although the moving averages are quite supportive as they trade below current price levels. The strike chosen goes hand in hand with the price target upgrades and seems obtainable barring any bad news and little fight at 96 / 99.
CRBP 70C STO (Sell To Open) 11/15
Vol: 508 OI: 0 Avg: $11.01 Prem: $559,360
Whales just opened a new Options’ chain with 500 volume of these Calls being Written (STO).
The company has a Short Interest of 1.2 million shares (12.4% float).
After trading in the single digits since Q2 of 2023, CRBP saw an insane increase in value of over 595%. The whale is betting that this growth is unsustainable (shocker) and can be considered a mean reversion trade to the downside. A loss of the moving averages would accelerate this action to benefit the premiums of the calls being sold decreasing in value.
Bonus flow:
GDS 10 call for 9/20 expiration is getting rolled to the 15 strike for 1/17 Exp for over $480,000. $3k in size into Earnings Tomorrow morning.
This being considered an earnings lotto, there isn’t much to say about the chart as it all depends on the report, guidance, and market reaction. Beware of the infamous IV crush if the reaction is subpar or not in favor of the whale’s position. These are always fun to watch, monitor, or even play, but comes with insurmountable risk. 0 or hero is the name of the game. Good luck to all who dare to play and place their bets before the upcoming bell.
That wraps up today’s notable flow as we move onto Wednesday. Be sure to check back in the subscriber chat in the morning for OI checks and any other notable information. As always, if you enjoyed the read, likes are always appreciated.
Cheers folks,