February 14, 2025
Position Update – Sofi (SOFI)
*Note: Your next issue of Cabot Options Trader/Pro will arrive next Tuesday, February 18 due to the market holiday next Monday, February 17 in observance of Presidents’ Day.
SOFI is trading higher by 5% today following news of several new big institutional buyers of the stock (Soros, Vanguard, Wells Fargo). And while that news is interesting, of greater interest to me is the big call buying in the stock that has perked up for the first time since earnings. Here is a small sample of this call buying from today:
Buyer of 15,000 SOFI February 16 Calls
Buyer of 16,000 SOFI February 17 Calls
Buyer of 6,000 SOFI March 15 Calls
Buyer of 8,000 SOFI March 17 Calls
Buyer of 8,000 SOFI March 20 Calls
This is a small sample of the wild call buying today in SOFI, as call buying is outpacing put buying on a ratio of 2.5:1 today (325k calls vs. 140k puts).
As I noted when we got involved with SOFI in late January, this stock is very controversial, and there is big short interest. And while controversial and high short interest can be troubling, IF the stock can get in gear, those shorts could be forced to cover quickly which has the potential to spur a wild move higher.
February 10, 2025
Weekly Update
The volatile and sloppy start to 2025 continued last week as the indexes fell hard on Monday, recovered in the middle part of the week, and then lost ground again on Friday. For the week the S&P 500 fell 0.2%, the Dow lost 0.5%, and the Nasdaq declined by 0.5%.
Stocks on Watch
As earnings season has heated up my list of earnings stars has grown, and will continue to do so in the next three weeks. Here are two earnings winners from last week that attracted call buying activity after their big rally:
First, let’s start with Philip Morris (PM) which is not a “sexy” stock, but interestingly the reaction to earnings was big as the stock gained 11.5% on Thursday, and then on Friday a trader bought these calls looking for more gains in the months to come:
Friday - Buyer of 2,200 Philip Morris (PM) September 160 Calls for $3.90 – Stock at 145.
Next up is Take Two Interactive (TTWO), whose stock hasn’t really moved for the past three months, but then on Friday following earnings the stock rallied 14%, and into that advance a trader bought these calls:
Buyer of 1,000 Take Two Interactive (TTWO) June 210 Calls for $15.50 – Stock at 208.
Finally, I want to note that I am closely monitoring Palantir (PLTR) which we had great success with last year, and whose stock rallied another 35% last week on earnings. Option activity is red hot in the stock; should this continue, we will get involved again.
Volatility
The Chicago Board of Options Exchange Volatility Index (VIX) closed the week at 16.5, which is mostly in-line with where the fear index has been trading as of late. And on that note, I will say a VIX at 16.5 is hardly screaming panic in the face of Tariff and DeepSeek worries, which is encouraging.
Option Order Flow was fairly mixed this past week as my Options Barometer came in at:
Monday – 5
Tuesday – 5
Wednesday – 6
Thursday - 5
Friday – 5
Events for the Week to Come
Earnings season will continue to garner the majority of traders’ attention this week, though traders will also be watching for inflation data via CPI on Wednesday and PPI on Thursday, as well as a Fed Chairman Jerome Powell speech mid-week.
And on the earnings front SHOP, DASH, VRT, RDDT, APP, HOOD and MANY more will be interesting to watch this week.
What Traders are Saying
As I noted above, I am closely watching Palantir (PLTR) for a new buy as the stock went wild on earnings last week. Here are my general thoughts on chasing earnings season winners …
First off, I rarely (if ever) buy on the first day of a big stock move as these stocks tend to be too wild to handle.
Second, I typically wait a couple days to see if the sellers are going to step in and take profits or even short the stock, and put into question the big stock move.
Third, ideally the new earnings star pulls back normally (a couple percent), chops around for a couple days, and then we buy when it strengthens again. This was somewhat the playbook for our SBUX buy last week.
And in the case of PLTR the stock rallied from 83 to 104 on Tuesday, pulled back to 100 on Wednesday (which was what I was hoping for), but then went wild to the upside again on Thursday before I could buy it.
Stepping back, I would love to see PLTR stock chill out and option activity to remain bullish. However, it’s also possible that the stock is a rocket ship, and we may miss out.
Let’s just see how the stock trades this week along with its AI peers.
Open Positions
Corning (GLW) May 47 Calls – GLW had a nice week as the stock rallied 3% and is once again approaching its 2025 high. Our calls remain in great shape.
Marvell (MRVL) June 115 Calls – MRVL and most semiconductor stocks were a total rollercoaster on Friday. In the case of MRVL the stock traded as high as 122, and as low as 110.5. This is not going to be an easy trade as the traders continue to grapple with the effects of DeepSeek.
Occidental Petroleum (OXY) March 52.5 Calls – Oil stocks rallied marginally last week, which is fine. But big picture we need OXY back above 52.5 for our position to get back in gear.
Rocket (RKT) March 20 Calls – Like I said recently, it will take a “miracle” for RKT to get back above 20.
Financials ETF (XLF) June 50 Calls – The XLF closed at a new high last week and looks outstanding. Our calls are in great shape, and we will simply let this trade work.
Jets ETF (JETS) January 26 Calls (exp. 2026) – The JETS ETF continues to be choppy day-to-day, but looks great. I remain bullish on the sector and our call position.
Sofi (SOFI) July 16 Calls – SOFI had a somewhat troubling week as the stock fell to the 15 level, and more concerning to me was big put buying into that stock decline. I’m watching this situation closely.
Starbucks (SBUX) January 110 Calls – SBUX is the newest addition to the portfolio following a strong earnings beat and stock reaction, and then continued stock strength in the days that followed. My play here is that the stock has re-emerged in the minds of investors following years of weakness/indifference.
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