Swaggy is back with some unusual options activity that was spotted last week. We’ll be looking into some of the plays that happened and what the player is expecting.
DDOG was fairly active last week after the stock jumped 15% on the news of a deal with MSFT. One would assume the MSFT deal will be huge in terms of size and might attract more clients for DDOG. Most of the flow was pretty short-term (2-3 weeks) expecting the stock to continue it’s upward momentum. October 16 and November 20 were the common expiration dates with most plays being out-the-money.
PINS saw some BIG buyers on Thursday as players expect the stock to perform well in the short-term. Players were buying strikes all across the board with each position being in the range of 3,000-7,000 contracts a piece. The largest positions were $4-5 million. Pretty heavy bullish flow, will definitely add this ticker in my stocks to watch this week. PINS will be reporting earnings toward the end of the month of October.
SFIX the e-commerce fashion brand with a subscription model for receiving fitted clothes. A stock with generally low volume in option flow saw some huge buys coming in. Biggest positions were for the December 2020 expiration, long calls and put-selling makes it for some heavily bullish sentiment. SFIX is set to report earnings 1 week before these options expire, so IV will be relatively high for that expiration date. If you go 2 weeks earlier you will be able to find “cheaper” options that don’t include the earnings report.
ZNGA saw a few big plays roll thru on Friday an hour before close. Option flow sentiment this week has been higher than normal and quite bullish. Some of the bigger plays were for over 10k contracts a piece, call-buying AND put-selling. ZNGA reports at the end of October.
Macerich Company (MAC) was another name with some bullish option flow. The stock has been on a steady downtrend over the last 3 months dropping to a low in the $6.75 range. Thursday around the time the stock started to show some strength a big purchase of 3,200 calls came through for March 2021 expiration. I like these longer-term plays when I see them because it gives the player a bit more time for everything to turn out how they expect. MAC continued to rally up 6% on Friday, so the player has already earned a decent amount so far.
Vanguard Real Estate (VNQ) had some players buying the dip over the last week when the stock dropped to $76 range. Looks like most action was put-selling expecting the the stock to get back above $80-81 in the next month or two. Since the action already happened the stock is up 10% and already trading at $81. Have we missed the boat on this one? Maybe, but interesting to see how these “big” plays end up working out more often than not.
I saved the most unusual for last, CenterPoint Energy (CNP). A player opened a SHORT STRANGLE where they SOLD both a call and put position. They sold the $20.5 strike calls, as well as sold the $19 strike puts to collect a total premium of $700k. This strategy is a THETA play where they expect little movement in the stock price until expiration in 4 weeks time. In theory if the player realizes max profit he will have made $35k per day that the market was open (from the time position was opened to option expiration).