January 28, 2025
Stock on Watch – Robinhood (HOOD)
With AI stocks in the “penalty box” following yesterday’s sector destruction, other stocks and sectors have popped up, including Robinhood (HOOD) which was a monster winner for our portfolio last year.
Here are the big call buys from HOOD the last two days:
Today - Buyer of 5,000 Robinhood (HOOD) August 55 Calls for $7.85 – Stock at 49
Today – Buyer of 1,500 Robinhood (HOOD) May 55 Calls for $5.50 – Stock at 49
Yesterday - Buyer of 2,000 Robinhood (HOOD) August 50 Calls for $8.65 – Stock at 47.
And while this call buying is very intriguing, and HOOD stock looks spectacular, I do want to note there was also a put buyer yesterday. Here is that trade:
Yesterday - Buyer of 3,000 Robinhood (HOOD) January 47 Puts (exp. 2026) for $10.50 – Stock at 48.
Stepping back, the put buy targeting a move lower by 2026 doesn’t “scare me” too much as this is a longer-term play, and call buying has far exceeded this lone bearish trade.
Regardless, should the market get back in gear and this call buying continue in HOOD, we may jump right back into a position in one of our big winners in 2024.
January 28, 2025
Corning (GLW) Earnings
Tomorrow before the market open Corning (GLW) will report earnings. Heading into the event we are holding a final piece of our position, having taken partial profits twice.
I am going to continue to hold my position through earnings as we have profits in the bank, option activity has been strong, and the stock looks good (outside of yesterday’s AI shakeout).
However, if you don’t want to take the earnings risk you must Sell to Close your position by the close of trade today.
GLW - With the stock trading at 50, the options market is pricing in a move of $3 this week, or 47 to the downside and 53 to the upside.
Open interest is skewed bullish on a ratio of 3:1 call vs. put.
Skew is pricing in typical downside fear and some upside interest.
January 27, 2025
Position Update – MRVL and GLW
MRVL is trading lower by 19%, and GLW is down 9% today, as anything tied to the AI theme is getting obliterated. Not fun!
My plan for now, and I mean this minute, is to continue to hold our positions, as these are the only two AI-related stocks we own in the COT/COTP portfolios. Also, because we took partial profits in both last week (thank goodness!), I’m willing to give these trades some time.
Stepping back, I do want to note that this is flat-out a nasty day for AI stocks, which have been on monster runs, and for all we know this is just the first day of a much deeper decline for the group. OR, this could just be a short-term shakeout and in the weeks to come these stocks could resume their monster moves higher.
Finally, as is always the case, I will lean on option activity to lead me in terms of my next moves … though interestingly, option trading today is very quiet to mixed as many traders are likely trying to wrap their minds around a potential big shift in the AI landscape.
January 27, 2025
Weekly Update
Despite some wobbles early in January the S&P 500 closed at a new all-time high on Thursday. And even though the indexes pulled back marginally on Friday, by week’s end the S&P 500 had gained 1.7%, the Dow had rallied 1.83% and the Nasdaq had added 1.53%.
Stocks on Watch and What Traders are Saying
This week I wanted to highlight a handful of bullish options trades that are certainly making me more and more confident in the state of the bull market. Here are those trades from Thursday and Friday in market leaders (though please note the market and AI-related stocks are under heavy pressure this morning on competition concerns coming out of China).
Thursday: Buyer of 7,500 Marvell (MRVL) February 130 Calls (exp. 2/7) for $2.70 – Stock at 124
Thursday: Buyer of 5,000 Marvell (MRVL) May 140 Calls and Sale of 5,000 May 100 Puts – Stock at 126 (bull risk reversal)
Friday: Buyer of 1,900 Broadcom (AVGO) April 280 Calls for $10 – Stock at 247
Friday: Buyer of 2,500 Broadcom (AVGO) February 255 Calls for $7 – Stock at 247
Friday: Buyer of 20,000 Taiwan Semiconductor (TSM) February 225 Calls (exp. 2/7) for $5 – Stock at 223
Friday: Buyer of 25,000 Nvidia (NVDA) February 146 Calls (exp. 2/7) for $3.70 – Stock at 144
Friday: Buyer of 87,000 Financials ETF (XLF) December 55 Calls for $2 – Stock at 51 (rolled from September calls).
When there are size buyers in market leaders, especially in the leading semiconductors (MRVL, AVGO, TSM and NVDA), that is generally a great sign. Throw in the large call buyer in the XLF, and I’m becoming more and more bullish on the market.
That being said, the semiconductors listed above are under heavy pressure this morning AND this week will be a monster week of earnings for big tech, so let’s see how the market responds to reports from AAPL/MSFT before declaring the market a runaway bull that has shaken off all the bond market worries.
However, should I get the full green light, I’m interested in these stocks coming out of last week’s earnings reports:
GE rallied 6.5% on Thursday following earnings, though it gave back 2% on Friday. I like this setup.
ABT gained 7% last week following earnings, closing at a multi-year high.
This list of earnings star candidates will surely grow the next couple of weeks.
Volatility
The Chicago Board of Options Exchange Volatility Index (VIX) closed the week at 15. Of note on the VIX, I wouldn’t expect the “fear index” will fall much from current levels until after the Fed meeting on Wednesday and then through the big earnings reports from Apple (AAPL), Meta (META) and Microsoft (MSFT) this week.
Option Order Flow was fairly mixed this past week as my Options Barometer came in at:
Tuesday – 6
Wednesday – 6
Thursday - 6
Friday – 6
Events for the Week to Come
This will be a monster week of potential market-moving events. Here is a list of macro-economic data releases, led by the Fed decision on Wednesday.
Tuesday: Consumer Confidence
Wednesday: Fed Decision
Thursday: GDP, Initial Jobless Claims
Friday: PCE (inflation data)
And if that wasn’t enough, earnings from SBUX, TSLA, META, IBM, MSFT, NOW, LRCX, UPS, INTC, AAPL, XOM and many more will bring some stock and market volatility.
Open Positions
Corning (GLW) May 47 Calls – On Wednesday of last week we sold the second piece of our trade for a profit of 70%. And while I think the stock looked great, and option activity has been strong (noted below), as always I stick to the profit-taking system.
Wednesday - Buyer of 1,000 Corning (GLW) August 60 Calls for $2.40 – Stock at 53.5
Wednesday - Buyer of 5,000 Corning (GLW) September 75 Calls for $0.57 – Stock at 54.
Marvell (MRVL) June 115 Calls – MRVL looked great last week and option activity was very strong. Though of note, the stock is down 10% this morning in the pre-market following the China/AI related news. Let’s see how the stock reacts to the news in the days to come.
Occidental Petroleum (OXY) March 52.5 Calls – OXY once again was rejected at recent highs, and my patience with this position is running thin. Earnings for the company will be released on February 18.
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 great having closed at a recent high on Friday. Also, the XLF could/maybe even be a beneficiary of this morning’s AI sell-off as money “may” move into other sectors … maybe.
Jets ETF (JETS) January 26 Calls (exp. 2026) – Similar to the XLF the JETS looks great and “could” be a beneficiary of this morning’s AI sell-off as long as the selling doesn’t hit all stocks and sectors.
Sofi (SOFI) July 16 Calls – SOFI released earnings this morning that beat expectations, though guidance appears to be a bit light. Regardless, the stock is down in pre-market trade, though so is nearly every stock as the market is under pressure.
Let’s step back and see how SOFI trades in the days to come.
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