August 31, 2023
Positions Update – SHOP, INTC, TJX
Very quickly I wanted to address three positions for various reasons.
Let’s start with Shopify (SHOP) which is trading higher by 10% today after the company announced a new app integration that will allow merchants to offer “Buy with Prime” on Shopify stores. “Buy with Prime” is a service provided by Amazon (AMZN).
Option activity is red hot following this news and our position is back in good shape.
Next up is Intel (INTC) which in the last hour at an investor conference noted several positives across the business for this quarter.
INTC is trading higher by 2% today and option activity is very strong in INTC as well following this news.
Finally, TJX (TJX) is trading at a new 52-week high, and yesterday traders continued to buy upside calls including these trades:
Buyer of 1,000 TJX (TJX) October 97.5 Calls for $0.47 – Stock at 92
Buyer of 2,000 TJX (TJX) September 94 Calls for $0.37 – Stock at 92
Our position is very quickly at a potential profit of approximately 15%.
August 28, 2023
Weekly Update
The market had many ups and downs last week, and despite a nasty sell-off on Thursday the indexes closed the week mostly higher. The S&P 500 gained 0.8%, the Dow lost 0.45%, and the Nasdaq rose by 2.26%.
Stocks on Watch
This week’s Stocks on Watch is made up of a “hodge-podge” of intriguing option activity. Let’s dive in …
Nutanix (NTNX) was a stock star several years ago, but since then has fallen out of favor. That being said, interestingly, despite the growth stock weakness the past three weeks, NTNX was breaking out to new recent highs until the growth sector really unwound on Thursday, which sent NTNX lower. However, on Friday a trader bought the following call position ahead of earnings this week:
Friday - Buyer of 4,000 Nutanix (NTNX) January 30 Calls for $3.30 – Stock at 30.
The stock strength in NTNX despite the market’s weakness is intriguing to me … though to be open, I am unlikely to add NTNX to the portfolio ahead of earnings on Thursday.
A stock that is NOT strong is Target (TGT) as the stock made a new 52-week low on Friday. However, I would note call buyers were active to close the week in TGT, including this trade:
Friday - Buyer of 2,000 Target (TGT) October 120 Calls for $6.60 – Stock at 122.
Blue-chip stocks like TGT, NIKE and DIS have been under immense pressure and look dreadful, so I am unlikely to add bullish positions in any of these stocks, which brings me to … Disney (DIS).
On Thursday, as Disney (DIS) was making a new 52-week low, a trader bought short-term puts looking for the stock to continue to break down. Here is that trade:
Thursday - Buyer of 6,000 Disney (DIS) September 80 Puts for $0.87 – Stock at 83.
The rumors of a takeover in DIS continue to circulate through the trading community. That being said, the stock looks dreadful.
Finally, housing stocks have been strong all year, though have started to weaken along with the market. And on Friday my options scanner picked up on put buying in all of the leading housing stocks, led by this put buy in Toll Brothers (TOL):
Friday - Buyer of 4,000 Toll Brothers (TOL) December 60 Puts for $1.15 – Stock at 76.5.
You do have to wonder if the “sky high” interest rates are going to start to weigh on housing stocks.
Volatility
The Chicago Board of Options Exchange Volatility Index (VIX) closed the week at 15.7, or lower by 12%, which continues to signal a lack of fear of a big market move lower. Though of note, it’s not surprising to see the VIX fall last week ahead of the long Labor Day weekend (the market will be closed next Monday).
Option Order Flow was fairly mixed this past week as my Options Barometer came in at:
Monday – 5
Tuesday – 4
Wednesday – 5
Thursday - 5
Friday – 5
Events for the Week to Come
Friday Jobs report
What Traders are Saying
This week I’m going to combine the What Traders are Saying section with the Open Positions breakdowns. Here are some of my thoughts …
First off, I feel like our portfolio is as balanced as it’s been in a while with the addition of our XLF puts, along with our previously purchased QQQ puts. While the portfolio is still leaning bullish, these two puts give us very quick bearish exposure, and for reasonable prices, that should protect us should the market break down further.
On the short volatility side of the coin, we have covered call positions in CLF and IONQ which are working just fine, and which should profit if the market chops around or goes higher. These trades, headed into the long holiday weekend, are a necessity to offset our long premium trades.
In terms of our bullish call positions, we currently own six trades, though in reality we have taken partial profits in all but one of those positions.
DKNG looked better to close the week, SHOP is showing some signs of life, UBER has held up spectacularly, INTC is surprisingly volatile day-to-day, XLE looks great, and FCX is a problem. Essentially, we have a good mix of bullish positions should the market get in gear.
My point in this position breakdown is that because we have a good mix of bullish and bearish positions, for very reasonable prices (the XLF puts are shockingly cheap, for example), I am totally open to the market going higher or lower, as the portfolio is flexible to a move in either direction (preferably higher, but open to lower).
