February 19, 2025
Stocks on Watch – GRAB
The stock on the top of my Watchlist for a new buy is Grab Holdings (GRAB) as call buying has been wild the last week. Here are some of the trades from today and last week, and then an explanation of why I’m not buying today (but might tomorrow):
Today – Buyer of 11,000 Grab Holdings (GRAB) January 4 Calls (exp. 2027) for $2.75 – Stock at 5.25
Today – Buyer of 12,000 Grab Holdings (GRAB) July 5.5 Calls for $1.05 – Stock at 5.25
Today - Buyer of 8,000 Grab Holdings (GRAB) July 6 Calls for $0.90 – Stock at 5.25
Last week:
Buyer of 5,000 Grab Holdings (GRAB) July 5 Calls for $0.85 – Stock at 4.80
Buyer of 10,000 Grab Holdings (GRAB) January 5 Calls (exp. 2027) for $2 – Stock at 4.80
Buyer of 6,000 Grab Holdings (GRAB) January 5.5 Calls for $1.20 – Stock at 4.90
Buyer of 35,000 Grab Holdings (GRAB) July 6 Calls for $0.60 – Stock at 5
Buyer of 15,000 Grab Holdings (GRAB) March 5 Calls for $0.55 – Stock at 5
Now where this becomes a bit speculative is GRAB is a Southeast Asia “super app” that provides services like Food Delivery, Mobility and Financial Services. Essentially this is an Uber, DoorDash and PayPal company rolled into one (or at least that is my interpretation).
And if that isn’t enough, the company will report earnings today after the close, and option prices are crazy expensive in volatility terms headed into earnings!
If GRAB wasn’t reporting earnings today after the close, based on the wild option activity I would buy today.
However, because of the earnings risk, I am going to stay on the sidelines through earnings, and then if the stock reacts well to earnings we may buy tomorrow … with the understanding that we may be chasing the stock higher (which I’m always ok with).
February 18, 2025
Occidental Petroleum (OXY) Earnings
Occidental Petroleum (OXY) will report earnings today after the close. Heading into the event, we are holding two-thirds of a position, which is at a loss, but have also taken partial profits on the first third.
I’ve debated selling another piece of our calls for around $0.60 as a stock decline on earnings tomorrow will crush our calls.
However, I’ve decided to keep my position as is, as a move higher of a dollar or two would spike the value of our calls.
Let’s see how earnings go …
OXY - With the stock trading at 49, the options market is pricing in a move of $2 this week, or 47 to the downside and 51 to the upside.
Open interest is skewed bullish on a ratio of 1.6:1 call vs. put.
Skew is pricing in typical downside fear and some upside interest.
February 18, 2025
Weekly Update
Despite early-week wobbles on inflation worries, the market again held its ground and in fact advanced as the week wore on. By week’s end the S&P 500 had gained 1.5%, the Dow had risen by 0.5%, and the Nasdaq had added 2.6%.
Stocks on Watch and What Traders are Saying
After two long months of market choppiness, which is somewhat of a nightmare for long call/put positions, the market may finally be showing signs of life as stocks handled hot inflation data very well last week (great sign), and I have a growing list of buy candidates which is another good sign. Here are some of those buy candidates coming out earnings season:
ABT
GE
RCL
IBM
PLTR
PM
UBER
HOOD
ABNB
DKNG
I like all of the stocks above, as well as Cisco Systems (CSCO) which has quietly been rising steadily for the past six months, and which broke out on earnings on Thursday and on Friday attracted this call buy:
Friday - Buyer of 5,000 Cisco Systems (CSCO) September 70 Calls for $2.70 – Stock at 65.
I like the set-up in CSCO as well as all of the stocks above. However, like I said earlier, we really need the market to get in gear for long call positions to work. And as fellow Cabot analyst Mike Cintolo, who writes the excellent Top Ten Trader, wrote last week:
By the letter of the law, not much has changed out there as the evidence is mixed: Most major indexes are still within their two-ish-month ranges, new highs are relatively muted while new lows are a bit elevated, and our Aggression Indexes (growth stocks vs. defensive stocks) is mostly neutral. Throw in regular bouts of selling on strength in strong names and we continue to favor going relatively slow.
Let’s hope last week’s strong close continues this week, and if it does, I will quickly ramp up our market exposure.
Volatility
The Chicago Board of Options Exchange Volatility Index (VIX) closed the week at 14.80 and remains at levels I prefer for the fear index, somewhere between the 14-16 level … essentially not showing extreme fear or complacency.
Option Order Flow was fairly mixed this past week as my Options Barometer came in at:
Monday – 5
Tuesday – 5
Wednesday – 5
Thursday - 6
Friday – 6
Events for the Week to Come
Other than the Federal Reserve Minutes from the previous meeting on Wednesday, this week is expected (though not guaranteed) to be quiet on the macro front.
In terms of earnings, there isn’t a dominant theme among the companies reporting this week as traders will be watching stocks from a variety of sectors including Growth (ANET, ADI, TOST), Oil (OXY, DVN), Consumer (WMT, WING, W, ETSY) and Med-tech (MDT, BAX).
Open Positions
Corning (GLW) May 47 Calls – GLW was mostly choppy last week though it continues to look great, and our position is in great shape. Also of note, on Friday a trader bought these calls looking for the stock to move to recent highs in the next month:
Friday - Buyer of 8,000 Corning (GLW) March 55 Calls for $1.20 – Stock at 52.65.
Marvell (MRVL) June 115 Calls – MRVL had a very disappointing week as the stock came under pressure. That being said, it’s just one week and option activity ramped up late last week including this buy from Friday:
Friday - Buyer of 2,500 Marvell (MRVL) March 110 Calls (exp. 3/7) for $4.08 – Stock at 104.
Occidental Petroleum (OXY) March 52.5 Calls – OXY will report earnings today after the close. I will send an options market breakdown later this morning ahead of the event.
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 looks fantastic as it continues to “flirt” with its 52-week high. Not much more to add other than I like our trade and the sector quite a bit.
Jets ETF (JETS) January 26 Calls (exp. 2026) – The 26 level continues to be a tough nut for the JETS to crack. And while I would love for the airline sector to finally bust out, the stocks in that group look great and our calls have a ton of time until January expiration.
Sofi (SOFI) July 16 Calls – SOFI came alive in a big way on Friday following the disclosure of new buys from several big institutional firms (Soros, Vanguard, etc.). Also, option activity was wildly bullish on Friday including:
Friday - Buyer of 8,000 Sofi (SOFI) March 17 Calls for $0.90 – Stock at 16.4.
Starbucks (SBUX) January 110 Calls – SBUX closed Friday right at its 52-week highs and looks terrific. Of note, the big weekly call buyer that I highlighted last week had his/her calls expire worthless as the stock closed below 113. Let’s see if that trader makes a run at weekly calls expiring this week as well.
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