Hello folks - we are officially in the final stretch of 2024 and what better way to start the fourth quarter than non-stop notifications of war mongering and fear posts. The middle east is in shambles and the U.S. markets showed weakness throughout the session. Ultimately, we had some data today that was relatively mixed and didn’t help with the previously mentioned war activity. Regardless, people are buying options.
Notable Flow:
CAPR 0.00%↑ 17.5C STO 12/20 Exp.
SBAC 0.00%↑ 220P STO 12/20 Exp.
ABT 0.00%↑ 110P STO 10/18 Exp.
MRK 0.00%↑ 110P STO 11/15 Exp.
CAPR 0.00%↑ 17.5C STO 12/20 Exp.
Vol: 5,128 OI: 1 Avg: $2.59 Prem: $1,325,949
This trader is placing a bearish bet, speculating that the stock price will remain below $17.5 by expiration. Trading 5k contracts at the Bid and receiving a credit of almost $1.3 million, this trader can close the position and collect the premium if the calls expire worthless. The stock rallied approximately 270% in the last week of September after announcing its intent to file a Biologics License Application for full approval of Deramiocel for the treatment of Duchenne Muscular Dystrophy Cardiomyopathy.
Although the recent news is bullish the stock, a rally of this sort is obviously atypical. This whale is probably thinking the same and placing a sort of mean reversion trade / rubber-band-short position by selling these calls. Incredibly over extended above all relative moving average’s shown on the chart, it could pan out well. However, if the FDA were to approve their trials before expiration, that could trigger further upside as well.
SBAC 0.00%↑ 220P STO 12/20 Exp.
Vol: 2,039 OI: 39 Avg: $3.90 Prem: $795,210
This Whale opened over 2k contracts on credit in a chain with very little OI. The Bid action and drop in the put net premium make us assume that the contracts are being sold to open. The trader speculates that the stock price will remain above $220 by expiration. This stock rarely gets any options volume; in fact, today, it had its highest options activity in the past 90 days.
A major player in the wireless communications infrastructure sector, operates as a Real Estate Investment Trust (REIT) focused on leasing antenna space on its towers to wireless carriers. SBAC also shows a bullish pennant on the daily chart with good support from recent resistance levels shown at 236 and change. Supportive moving average’s as well. This whale will likely be looking for a break of this pennant for continued upside with these levels noted as support for potential loose stops.
ABT 0.00%↑ 110P STO 10/18 Exp.
Vol: 5,094 OI: 3,594 Avg: $1.44 Prem: $731,264
This option chain had a spike at around 1:00 pm ET, with 4.8k contracts traded at the Bid. The high OI makes it a little tricky to determine if it was an opening or closing position, but since volume exceeded the OI in one trade, it makes us assume that they are opening these calls on credit (STO). Tomorrow, the new OI should be close to or over 8k if our assumptions are right.
Healthcare is typically a defensive sector to own and with the broader market showing relative weakness across the board today, this flow makes a little bit of sense in that aspect. Shown on the daily chart is a falling wedge whilst reclaiming the 10DMA and pushing into this level of resistance around 114. A break above could trigger plenty of upside movement in that next range shown in the chart below.
MRK 0.00%↑ 110P STO 11/15 Exp.
Vol: 10,285 OI: 3,935 Avg: $2.04 Prem: $2,095,329
This trader placed a big bet by writing 10k contracts and getting over $2 million in credit. The Whale speculates that the stock price will remain above $110 by the expiration date despite concerns that the company will face challenges due to weaker demand and increased domestic competition in China.
Another healthcare / biopharmaceutical company flow pull here. Upcoming earnings report at the end of the month on Halloween, could drive this whale’s position. Shown on the chart is another falling wedge breaking above in today’s session into resistance. The moving average’s on this name remain overhead and seem to be declining, however this can change over the coming days/weeks. 114.60 is the immediate resistance level before treading into a nice range bound zone with the top of range being ~119.
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