Unusual options activity is often ignored by many investors, but for some, it plays a key role in their trading strategies and approach.
When big institutions make their move in the options pit, they can’t hide once the volume shows up and the open interest is logged. Fintel’s leaderboard of options activity for both calls and puts helps us keep track of it all when we see outsized volume.
C3.ai (US:AI)
C3.ai (US:AI) did not lead the list of unusual options activity, but it caught everyone’s attention last week and deserves the top spot in this article. That’s as shares fell 26.3% on Tuesday following accounting accusations from short-seller Kerrisdale Capital. C3.ai fell another 15.5% on Wednesday, then rallied on Thursday by climbing 8.3%.
For the week, it ended lower by 32% as volatility in this particular name exploded higher. Did someone know that shares would get pummeled on Tuesday?
Less than 10 minutes before the close on April 3, one trader plunked down $100,000 for the $29 puts expiring three days later, on April 6. The trade took place with shares trading near $34, which was quite a bit out-of-the-money given how little time these puts had until expiration.
For context, these puts on C3ai stock were about $5 out-of-the-money at the time of the trade. A day later these puts were in-the-money by about $5 and at last week’s low, they were in-the-money by almost $8.50. More specifically, these puts ended April 3 trading at 50 cents a contract. At the week’s high, they were worth $8.45. Do the math and you’ll see that’s a 17-fold return in two days, although that’s admittedly measuring from Monday’s close to the week’s high.
That wasn’t the only action, though.
On April 5, someone took a notable bearish position, buying $3.88 million of the July 2024 $15 puts when shares were trading near $21.50.
A few hours later, another trader took a big bullish position, buying more than $1 million of the July 2023 $30 calls, which were well out-of-the-money by about $10. A day later, the July $30 calls were active again, with one trader buying almost $962,000 worth in one scoop. A few hours later someone bought $940,000 worth of the July $25 calls.
Alibaba (US:BABA)
The stock that actually led this week’s list of unusual options activity was Alibaba (US:BABA), which has been trading quite well lately. The stock has rallied in three straight weeks and is up almost 30% in that span.
There were some sizeable bearish bets, but the trades that stood out last week were decisively bullish. Specifically, on April 4, there were some large opening put sales — a bullish trade.
They included a $27.2 million sale of the June $210 puts, a $23.4 million sale of the June $195 puts and a $2.43 million sale of the April $150 puts. All three sales were deep-in-the-money with shares trading near $100 at the time.
Two days later, they sold another $8.5 million of the June $210 puts and $9.2 million of the June $195 puts. So clearly someone is building up a big position in these puts.
Alphabet (US:GOOGL)
Next on the list is Alphabet (US:GOOGL), which like Alibaba, had a plethora of put sales take place on April 4.
The ones that stand out include roughly $17.9 million of the June $155 puts being sold and $5 million of the June $130 puts being sold. A few hours later and likely the same traders were back at it, selling an additional $9.1 million of the June $155 puts.
Both strikes were deep-in-the-money with shares trading near $105 at the time of the trade.
PayPal (US:PYPL)
Making a rare appearance for the top three stocks on the list of unusual options activity, PayPal (US:PYPL) grabbed our attention. A trend is clearly evident within the top three, with more deep-in-the-money put sales occuring on April 4.
In this case, it occurred as someone sold more than $18.5 million worth of the January 2024 $160 puts, along with $6.81 million of the September $130 puts. In total, it was more than $25 million worth of put sales.
A couple days later on the 6th, it was likely the same sellers back in action, selling $2.75 million worth of the September $130 puts again.
Nvidia (US:NVDA)
Seemingly every trader’s favorite bull stock so far in 2023, Nvidia (US:NVDA) has raised a few eyebrows. While there were some large put sales during the week, calls stood out this time.
On April 4, one trader gobbled up $2.3 million of the out-of-the-money June $300 calls. A few hours later, someone spent almost $1 million on the June $320 calls.
The next day, April 5, the January 2024 $300 calls were in demand, with one trader spending $2.2 million in premium in one trade.
Then, just six minutes before the close on Thursday — the final trading session for the week — someone paid more than $800,000 for the April in-the-money $260 calls, when Nvidia was trading near $270.
Nio (US:NIO)
While Tesla (US:TSLA) tends to get most of the EV attention, it’s Nio (US:NIO) was the one that jumped out this week in terms of unusual options activity. Three trades stood out, two of which were bullish, and all of them occurred on April 5. Given that they all occurred at the same time, they are likely tied together as part of a more complex spread.
In any regard, the trader sold roughly $3.5 million of the January 2025 $30 puts, $5.85 million of the January 2024 $25 puts and bought $1.1 million of the June $25 puts.
All of these strikes were deep-in-the-money with Nio stock trading near $9 at the time.
Wells Fargo (US:WFC)
Most of the action this week was in big tech stocks, but one non-tech stock that stood out was Wells Fargo (US:WFC).
There was plenty of action, but only one trade really stuck out. That’s when someone sold $2.39 million worth of the January 2025 $35 puts, which were only slightly out-of-the-money with shares trading near $37.50 at the time of the trade.
This story originally appeared on Fintel.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
