Whispers from the Shadows: Aerospace Defense, Biotech Breakthroughs, and the Silent Surge in Industrial Machinery
Notable Flow 9/17
Yet again, it is the biggest FOMC of our lives tomorrow. Until the next one… People are wagering anywhere from no cuts, all the way to 75bps. In a way pretty comedic to see the bickering across platforms as to who is smarter than the other when in reality, nobody knows. All we can do is await the decision and hope our bags are properly packed for whatever is in store. Some suss boys and eyebrow raisers listed below.
Notable Flow:
FTAI 0.00%↑ Bullish Risk Reversal: 135C BTO and 115P STO 10/18 Exp.
SIRI 0.00%↑ 29C 01/17/2025 Exp.
JCI 0.00%↑ 80C 01/17/2025 Exp.
BNTX 0.00%↑ 110P STO 12/20 Exp.
ZI 0.00%↑ 13C STO 11/15 Exp.
FTAI 0.00%↑ 1.15%↑ Bullish Risk Reversal: 135C BTO and 115P STO 10/18 Exp.
115P: Vol: 517 OI: 89 Avg: $2.12 Prem: $109,826 & 135C: Vol: 516 OI: 813 Avg: $4.19 Prem: $216,105
This Whale speculates that the stock’s price and volatility will increase or remain the same. It does this by selling 500 contracts of the puts on credit and using that credit to buy 500 contracts of the calls, using the strategy known as a risk-reversal. If the price of the stock remains between $115 and $135, the PnL will be at break-even; for the trade to have a positive PnL, the stock needs to trade above $135 before the expiration; if the stock trades below $115, the PnL will be negative.
The stock is up about 15% since FTAI Aviation closed the acquisition of LMCES on September 9th, 2024.
Being that the stock is trading at all-time-highs, it’s hard to gauge levels of resistance above yet I have thrown out some potential targets. A break of this all time high mark (yellow ray) would trigger further upside and possibly some chasers to get in on a breakout. Momentum buyers can fuel an already strong asset even further. Trading above all the supporting moving average’s gives this a good look going forward to pair with this bullish flow.
SIRI 0.00%↑ 29C 01/17/2025 Exp.
Vol: 1,418 OI: 22 Avg: $0.92 Prem: $129,748
The stock dropped 3% today after Goldman Sachs cut the price target to $26 from $32.50, dragging it to a new 52-week low. SiriusXM shares are now down 58% YTD; however, this isn’t scaring the Whales to place their upside bets, trading about 1.4k contracts at the Ask of these calls. Additionally, there was unusual activity on the 26C and 28C with the same expiration and the 28C for 12/20 expiration.
The Net premium chart below shows the biggest call spike today and yesterday since 08/29
We’ve talked about how dangerous a game it is to catch falling sharp objects and that you only have one set of hands, but it can be fun to gloat when you successfully do so. Yet another instance of this with SIRI trading at yearly lows as we mentioned leaking lower and lower. Traders aiming to catch this upside reversal on news rumors can warrant tons of success but comes with great risk as well. Not much to note on the chart as it has lost all of its moving averages.
JCI 0.00%↑ 80C 01/17/2025 Exp.
Vol: 8,765 OI: 642 Avg: $2.08 Prem: $1,823,289
With almost 8.7k of total volume on this chain today, we saw a lot of mid- and Bid activity, which makes us assume that not all the contracts traded will show up when OI updates tomorrow. However, the Net premium chart favors the call side. The stock had its highest options volume in the past 30 days, and the call net premium reached its highest level in the past 30 days.
Looking to break to the upside as we test the trendline from 2021 highs, JCI has potential for a massive breakout as investors look for a pop into mid 70’s. Trading above all the moving averages shown in the chart and holding with resilience above 65, the risk is quite defined.
BNTX 0.00%↑110P STO 12/20 Exp.
Vol: 1,002 OI: 104 Avg: $5.00 Prem: $501,104
This Whale is placing a bullish bet and expects the stock price to remain above $110 by expiration. The stock has had an incredible run, and it has been up over 40% since September 9th. A mix of good news, including upgrades from financial institutions such as JP Morgan and Bank of America, an FDA Approval & Authorization for Omicron KP.2-adapted COVID-19 Vaccine, and a positive update across mRNA and Immunomodulatory Oncology Portfolio at ESMO Congress, have fuelled the stock rally in the past couple of days.
The chart below shows the Multi-modality Immuno-Oncology pipeline that the company presented at the ESMO 2024 conference in Barcelona, Spain.
Our assumption here is that the whale saw the news and immediately grabbed atm puts to sell in hopes the upside we have seen over the previous few sessions continues as it looks to break the multi-year downtrend moving towards the 200wk MA. Pretty explosive look to the weekly chart as it tests the top of the range as well. A break above could look for 20% + in equity from here with potential targets marked.
ZI 0.00%↑ 13C STO 11/15 Exp.
Vol: 36,042 OI: - Avg: $0.29 Prem: $1,043,482
This Whale is placing a bearish bet by speculating that the stock will not exceed $13 by expiration. A total of 36k contracts traded mostly at the Bid in a chain with no OI. The new OI tomorrow will allow us to know how many of these contracts were opened and held. The call net premium had its lowest level today in the past 30 days, and the stock had the highest volume of options in the past 45 days.
To put it plainly, this chart is a mess. In addition, it is trading in a bear flag pattern currently just above the 50DMA. With a heavy ceiling of this call selling, it likely gets held down for the foreseeable future.
That’s the end of our basket today. Interesting grab as we await the Fed’s decision tomorrow. Hope you all enjoyed the read and give us a like if you did as it is greatly appreciated. As always, OI checks on all flow listed will be released in the subscriber chat in the morning.
FOMC Eve,
Kian, Jersace, & Jon