[Daily Digest] - Unusual Options on ROKU, PYPL, UBER, LULU, and XOM

December 8, 2023 - Traders take advantage of sideways action; Several hedging strategies emerge from the unusual options reports.

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Welcome Back, Options Trader

Fridays can be a roll of the dice. Sometimes wild. Other times like watching a snail race – minimal progress. The market action pushed against the highs on the major indexes (NASDAQ, S&P500) today with indifference.

Despite the grind, the bullish warriors in the trading realm aren't throwing in the towel. Most players holding their cards tight, unwilling to up the ante until Monday rolls around.

There’s a blend of option tactics emerging from the shadows. The plot thickens in the trading saga with unusual options stacking up around mid-December 2023 and mid-January 2024

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IN TODAY’S DAILY DIGEST:

• ROKU Call 122.00, 12/15/2023 expiry with 321 in volume and 3,263 in open interest at this strike. OTM since the underlying closed at $102.97

• UBER Put 62.00, 12/15/2023 expiry with 2,574 in volume and 2,513 in open interest at this strike. ATM since the underlying closed at $62.46.

• PYPL Put 87.50, 1/19/2024 expiry with 2,815 in volume today and 152 in open interest at this strike. Deep ITM since underlying closed at $59.04.

• LULU Put 450.00, 12/15/2023 expiry with 3,482 in volume today and 2,957 in open interest at this strike. Deep OTM since the underlying closed at $502.74.

Get the lowdown below. I’ll try to unravel these trades with an option strategy and a P/L analysis. Get ready to decode the trading enigma!

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DECEMBER 8, 2023 UNUSUAL OPTIONS DIGEST

Roku, Inc (ROKU)

I’m spotting a steady stream of out-of-the-money (OTM) action across all the ROKU call strikes. Tossing one more hefty lot into the mix from today's option flow, just to spice things up.

• Dive into the Unconventional Option Deets:

  • Expiry: 12/15/23 (5 days till expiry); Strike: 122.00 Call; Volume: 3,275;

• Stock's Dance Moves Unveiled:

  • Closing Price Today: $103.36/share; Chart Pattern: High Handle; Direction: Consolidation.

• Trading Chronicles: We’re venturing into out-of-the-money territory with this play. It appears all set to collect the premium on December 15, 2023. The trader is leveraging short-term sideways action in the consolidation phase. The stock chart is still bullish. Significant insider selling during November 2023 (19 sells representing 86,885 Shares over the last 3 months, according to SEC filings).

• Option Tactics Unleashed: Possible Strategy - Collect against held stock while the stock moves sideways.

  • Tactic: Strap in for a Covered Call play – kicking off this maneuver today, where hitting the breakeven sweet spot at anything above 102.94 sets the stage. Picture this: a savvy trader using this tactic could potentially rake in a solid $2,108 per contract. But, ah, here's the catch – tread carefully. The risk looms larger than the potential rewards if the investor gets trigger-happy, selling more calls than they've got in stock ownership. It's a high-stakes game, and the name of the game is calculated risk. Buckle up for the ride!