September 7, 2023
Stocks on Watch – ZM and NTNX
As I highlighted late last week the option activity in Zoom Video (ZM) had become very interesting following these call buys on Thursday:
Thursday - Buyer of 10,000 Zoom Video (ZM) October 80 Calls for $1.15 – Stock at 71
Thursday - Buyer of 4,000 Zoom Video (ZM) November 90 Calls for $1.07 – Stock at 72
Thursday - Buyer of 3,500 Zoom Video (ZM) December 75 Calls for $5.65 – Stock at 71.5.
Since then, the market has softened, yet ZM stock has continued to move higher, and this morning a trader bought even more out-of-the-money calls. Here are those trades:
Today - Buyer of 3,000 Zoom (ZM) November 85 Calls for $1.85 – Stock at 74
Today - Buyer of 4,000 Zoom (ZM) November 90 Calls for $1.23 – Stock at 74.
This option activity is intriguing and should the market get in gear, which is questionable the last couple of days, I could easily see adding ZM to the portfolio. (I’m trying to be patient because the market is soft, but this ZM option activity is everything I look for.)
Another stock on my watch list is Nutanix (NTNX), which attracted call buying ahead of earnings last week, the stock responded well to those earnings, and has continued to tack on gains since. And this morning a trader bought upside calls looking for more upside to come. Here is that trade:
Buyer of 2,000 Nutanix (NTNX) October 37.5 Calls for $0.85 – Stock at 36.
I like the way NTNX stock looks, and this call buying is interesting. NTNX is definitely on my wa
September 6, 2023
Stocks on Watch – Freshworks (FRSH)
As I’ve written in the past, hedge funds and institutions use options to gain exposure to the market and stocks for a variety of reasons. It could be for overall market exposure, a play on a sector turning hot or cold, earnings announcements, or the reason I’m writing this Stocks on Watch, to play an Investor Day. This brings me to …
Freshworks (FRSH) will host its Investor Day tomorrow. And ahead of this event call buying activity has heated up in FRSH looking for the stock to move higher in the days/months to come. Here are those call buys:
Buyer of 8,000 Freshworks (FRSH) September 22.5 Calls for $0.80 – Stock at 22
Buyer of 4,500 Freshworks (FRSH) October 25 Calls for $0.55 – Stock at 22.2
I was not too familiar with FRSH before today’s bullish option activity and am not going to get involved with this trade as the market is weak today. However, I would note the stock has been highlighted in recent weeks by fellow Cabot Analysts Mike Cintolo and Tyler Laundon, and I will watch to see how the stock reacts to the Investor Day tomorrow.
September 5, 2023
Position Update – Intel (INTC)
As I’ve written, Intel (INTC) has been a company and stock disaster for years. However, it feels like the ship may be turning around as news out of the company continues to improve. The stock has been outperforming many of its semiconductor peers the last couple of months, and option activity has been red hot, including these trades made in the last couple of days:
Today - Buyer of 6,000 Intel (INTC) October 40 Calls for $0.77 – Stock at 37
Today - Buyer of 12,000 Intel (INTC) September 38 Calls (exp. 9/8) for $0.24 – Stock at 37.25
Friday – Buyer of 7,000 Intel (INTC) October 37 Calls (exp. 10/6) for $1.13 – Stock at 36
Thursday - Buyer of 80,000 Intel (INTC) December 31 Calls for $5.45 – Stock at 35 (rolled from October calls)
If Intel the company truly shakes off its years of missteps, it’s possible the stock could really take off as investors that have rightly bailed on the shares that have so grossly underperformed rush back into the stock story.
Finally, our position is now at a profit of 45%, and I will continue to hold our trade looking for much larger gains in the days/weeks to come should the market stay in gear.
September 1, 2023
Weekly Update
Because I promised my wife that I would not be working at the beach this weekend (evidently me typing away at the keyboard while she entertains the kids is not her dream beach weekend) I am sending the Week in Review this afternoon. Have a great Labor Day Weekend!
The market is on course to have a nice week as the S&P 500 is higher by 3%, the Dow is up 1.2% and the Nasdaq tacked on 3% of gains. The VIX is trading at 13, which is lower by 17% on the week, which given the market’s gains is not surprising ahead of a long weekend.
In terms of stocks that are on my radar for new buys, my list has expanded in recent days as salesforce.com (CRM), Dell (DELL), Ciena (CIEN), Nutanix (NTNX) and Samsara (IOT) responded very well to their earnings releases this week. I’m intrigued by all of those stocks.
In addition, I am keeping an eye on Zoom Video (ZM) which looks “OK” but saw a wild day of call buying on Thursday, including these trades:
Buyer of 10,000 Zoom Video (ZM) October 80 Calls for $1.15 – Stock at 71
Buyer of 4,000 Zoom Video (ZM) November 90 Calls for $1.07 – Stock at 72
Buyer of 3,500 Zoom Video (ZM) December 75 Calls for $5.65 – Stock at 71.5.
There was further call buying in ZM today, and I will keep an eye out for further bullish option activity early next week.
And while the call buying in ZM was strong last week, Disney (DIS) continues to look terrible, and attract put buys, including these trades Friday:
Buyer of 5,000 Disney (DIS) September 80 Puts (exp. 9/8) for $0.55 – Stock at 81.5
Buyer of 7,000 Disney (DIS) October 75 Puts for $0.77 – Stock at 81.5.
Despite the whispers of a potential takeover of Disney, something doesn’t smell right about the stock or the option activity.
In terms of our positions, it was a pretty good week as many of our stocks that fell during the 5% market decline of the previous couple of weeks came roaring back to life last week. Let’s dive in:
Cleveland-Cliffs (CLF) September 16 Covered Call – CLF is trading at 15.50 this afternoon, which is perfect for our September 16 covered call that has just two weeks until its expiration. This trade continues to work well.
DraftKings (DKNG) January 25 Call – DKNG gained 5.5% this week and our trade is back in good shape.
Freeport-McMoRan (FCX) January 44 Calls – All of a sudden FCX is back alive as the copper/material play is up 9% this week, and option activity is overwhelmingly bullish, including these trades from this morning:
Buyer of 3,000 Freeport McMoRan (FCX) September 42 Calls (exp. 9/8) for $0.55 – Stock at 41.7
Buyer of 15,000 Freeport McMoran (FCX) January 45/50 Bull Call Spread and Sale of January 38 Puts – Stock at 41.5.
Intel (INTC) January 34 Call – Following a glowing investor day yesterday in which the company hinted that it is firing on all cylinders, INTC stock is back in gear with a gain of 9.5% on the week. Of note, option activity remains red hot, including these trades from Thursday:
Buyer of 80,000 Intel (INTC) December 31 Calls for $5.45 – Stock at 35 (rolled from October calls)
Buyer of 7,000 Intel (INTC) October 37 Calls (exp. 10/6) for $1.13 – Stock at 36.
IonQ (IONQ) September 15 Covered Call – IONQ is trading at 17.3, which is $2.30 above our short strike price, which is terrific for our September 15 covered call that has two weeks until expiration. This trade is working very well.
Nasdaq ETF (QQQ) December 370 Puts – And while all of the trades above had very good weeks, not surprisingly our QQQ puts had a bad week. Such is the life of a somewhat hedged portfolio (we are definitely long the market).
Shopify (SHOP) January 62 Call – SHOP erupted this week with a gain of 22% following news that the company had “integrated” offerings with Amazon. Option activity remains red hot following this news. If the market can stay in gear, SHOP has stock star written all over it.
TJX (TJX) April 92.5 Calls – Speaking of stock stars, TJX also looks terrific as the stock broke out to a new 52-week high late this week, and option activity remains strong. Out trade is off to a great start.
UBER (UBER) December 40 Calls – UBER looked great during the three-week market sell-off, and continues to look like a leader as the market has been strengthening again, having gained 7.5% on the week. Of note, on Thursday a trader bought the following position:
Buyer of 6,000 Uber (UBER) October 50 Calls for $1.45 – Stock at 47.5.
Financials ETF (XLF) March 33 Put – For now at least, my buy of the XLF puts was ill-timed. That being said, the price was right then, and it continues to be, as leading financial stocks like Citigroup (C) and Wells Fargo (WFC) look dreadful even as the market has rallied.
Energy ETF (XLE) January 85 Calls – The XLE continues it slow and steady ascent towards its 52-week high which is perfect for our call position that is now at a potential profit of approximately 50%.
