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Options activity - thinking out loudJust thinking through the options activity that we saw today out loud... First, and this is something I pointed out in other recent posts - the open interest in the options for Oct and Nov, before today, was light. Given that the short interest was ~16M shares at the end of August, I would have said that the open interest on the calls, again, before today, was unusually light. In the past, we typically would see near the money strikes for 1 month out somewhere between at least 1-2k on the open interest. Certainly not the between 1-200 that we had on the Oct $11, $12 and $13 calls that we had before today. So, I say all that to say that while the single day activity IS absolutely unusual, the end result, at least on the Oct $11 calls and Nov $11 calls may just put us in the ballpark of what usual would have been for open interest come tomorrow. With respect to $11 calls in particular, one aspect that makes me feel like it could be a hedge, potentially against a short position, perhaps married up with a covered call seller, is that a significant premium was paid for $11 calls versus $12 calls. In other words, the specific strike matters. If this were a news leak and a 'gamble' on data that should drive the SP significantly higher, then why buy the $11s for $0.86 when you could get the $12s for $0.40? That said, outside of the near the money strikes, the higher strikes - Oct $14, $15 and $16 calls have higher interest than I would have expected, and there were 1.2k Oct $16s traded today as well. I don't know if it is a leak. I hope that it bodes well for positive news coming our way. But we have seen this story before. Unusual activity speaks to positive news coming, but then becomes open interest and turns into a boat anchor on the other side of the news. We just went through this whole exercise at ISTH, where collectively the longs here had our asses handed to us after getting really fantastic data. See here: So, I will remain cautiously optimistic that the activity is indicative of some great fundamental development that is coming our way - but I won't personally be joining in the foray of buying calls, and I won't be surprised if said news actually comes and the options fizzle out anyway. Best of luck to those who do. We deserve a win here, but I don't know when options buyers will start to see a reward again. They certainly have not for the better part of the past two years. I personally liked it much better yesterday when there was no open interest for the next two months. I think that gave clear room for the stock to run. To each their own, but IMO, this company has made a very real enemy in a determined short, and that short knows that this is a retail driven stock. Longs that buy calls in lieu of shares here play into their game. It puts a timeline on your investment, and they have shown they are more determined and willing to wait you out. I sincerely hope this options activity is the light at the end of the tunnel and good times are here again, but I will very much be patiently waiting with my long shares and only believe it when I see it. |
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Msg # | Subject | Author | Recs | Date Posted |
133615 | Re: Options activity - thinking out loud | Booskers | 1 | 9/17/2019 9:02:03 PM |