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Big Tech Options Bets Die Down. XOM, MRK, LCID Stock Lead the Charge

Bret Kenwell

Published: July 25, 2023 6:55 am

Last Updated: July 25, 2023 11:28 am

While many investors brush off options, many others like to “follow the flow.” In other words, they want to know what the big funds and institutions are doing. We can follow their footsteps when looking for unusual options activity.

Thankfully, there’s a leaderboard of options activity for both calls and puts, helping us keep track of it all when we see outsized volume.

Notably, the options activity in mega-cap tech stocks has died off a bit. So much so that only two cracked the top 10 — Microsoft (US:MSFT) and Amazon (US:AMZN). That’s even more surprising with the Nasdaq 100 index’s special rebalance in play, only its third special rebalance in history.

With that in mind — and as earnings season picks up — let’s look at seven stocks with some heavy call flow over the last week.

Exxon Mobil (XOM)

Sitting atop this week’s Options Flow Leaderboard is Exxon Mobil (US:XOM), which is also the largest U.S. energy firm. The reason Exxon leads this week’s list? A consistent short-term put seller. The trades appear to be opening trades, meaning they are bullish in nature.

Starting on July 17, one trader sold $2.8 million of the July $111 puts, which were in-the-money by about $10 a share as the stock was trading at $101 at the time of the trade. Then again on July 18, they sold $5.1 million of the same put, then $16.6 million worth on the 19th.

Another $3.9 million worth of the July $111 puts were sold on the morning of July 21.

However, that wasn’t the only trade. The $110 puts were also sold in notable size on each day, with $2.5 million sold on July 17, $2.64 million sold the next day, $8.15 million sold on July 19 and $2 million a day later.

That’s either one heck of a coincidence or one heck of a big trade, with the total premium from this four-day put sale totaling more than $43 million.

Merck (MRK)

Merck (US:MRK) also had some bullish put sales take place on the afternoon of July 20, coming a week after some heavy call flow came through on the sell side. These in-the-money call sales may have looked bearish on the surface, but with a short-term expiry and an ex-dividend on the calendar, it was likely a dividend capture strategy at play.

So that brings us to Thursday’s action, where one trader was a big seller of the July $113, $115 and $120 puts. All three strikes were in-the-money, with shares trading near $106.50 at the time of the trade on July 20. Also of note, all three trades took place at the same time.

Specifically, someone sold $6 million of the $113 puts, $1.26 million of the $115 puts and $14.7 million of the $120 puts. All three sales were opening sales as opposed to a closing position and all three expired on July 21.

Lucid Motors (LCID)

Tesla (US:TSLA) reported earnings last week, but Lucid Motors (US:LCID) is the one that showed up in the unusual options activity. However, it was one trade from July 17 that really landed it on this week’s list.

That’s after someone sold $11.67 million of the January 2024 $47 puts and $5.94 million of the $37 puts with the same expiration date. Also within that same trade included a sale for $1 million worth of the $10 puts expiring on July 21.

Although the main part of the trade is certainly the roughly $17.5 million of long-dated, deep-in-the-money puts sale, it’s interesting that it was tied to such a short-term put sale as well.

CVS Health (CVS)

CVS Health (US:CVS) popped up on our screens as heavy call-buying showed up. There was some notable action on the July 21 options, buying the $72 calls and selling the $72.50 calls. This trade was in-the-money already and went on to expire in-the-money. Meaning the trader who bought the spread — long the July $72s and short the $72.50s — was able to close that spread for its full value of $2.50 a share.

Otherwise, there was one other notable trade in CVS stock options last week, which occurred when one trader paid $12.7 million in premium for the November $72.50 calls. These calls were slightly in-the-money with the stock trading near $75 at the time of the trade.

If it was not part of a larger spread — and it doesn’t appear to be — this is an outright bullish position.

Caterpillar (CAT)

Heavy equipment maker Caterpillar (US:CAT) had a flurry of options activity, all of which stood out in the final hour of trading on July 18.

That’s as someone bought more than $880,000 of the in-the-money July $250 calls every couple of seconds at 3:15, until they accumulated more than $5.3 million worth of premium.

That kickstarted a ton of action that resulted in tens of millions of dollars in premium, but was finished within the minute. Every few seconds, a multi-million dollar order went through. Ultimately, a combination of action was seen mostly in the July $210 and July $230 puts.

That’s as someone sold $50.3 million worth of the $210 calls and bought roughly $48.75 million of the $230 calls. They also sold $4.367 million of the July $240 calls.

Also worth noting, about $12.98 million of call buying happened late in the session. That’s as someone bought $2.76 million of the $210 calls and $2.76 million of the $220 calls, $5.3 million of the $230 calls, and finally, $2.13 million of the $240 calls. There were no offsetting short calls sold against the position.

Microsoft (MSFT)

Microsoft (US:MSFT) is in focus this week because of earnings, but the tech giant and the next name on our list, Activision Blizzard (US:ATVI), have been in the news lately as the two are still working toward an acquisition.

For Microsoft specifically, a few trades stood out, including one on July 18 where someone bought more than $3 million of the August $365 calls, which were slightly out-of-the-money at the time of the trade. These hit the tape just minutes after someone bought $1.1 million of the October $385 calls.

Later in the day, someone spent another $3.13 million on the January 2024 $425 calls, before another buyer stepped in and scooped up $11.69 million worth of the June 2024 deep-in-the-money $200 calls. These calls were $160 a share in-the-money and are likely being used in a stock-replacement type of trade.

There was some bearish call activity, too.

In particular, two trades stood out. The first was a $3.18 million sale of the in-the-money September $335 calls and the other was a $9.08 million sale of the deep-in-the-money September $250 calls.

Activision Blizzard (ATVI) 

There were some notable options trades in Activision Blizzard last week, one of which came on July 18 as someone bought $2.71 million of the deep-in-the-money July $65 calls. A few hours later, someone bought $1.25 million of the $85 calls. A day later, one trader bought $1.59 million worth of the January 2024 in-the-money $80 calls.

Then on July 20, someone bought the January 2024 $77.50 calls, paying over $3.7 million in premium, while another trader paid $1.275 million in premium for the August $80 calls.

There was some bearish call activity too, most notably on July 20 when someone sold $2.57 million of the in-the-money Aug. 25 $80 calls.

This article originally appeared on Fintel