Unusual Options Activity in Apple, Home Depot and 8 Other Stocks
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Bret Kenwell
Bret Kenwell has been publicly writing about and analyzing the stock market for more than 10 years. What started off as fundamental analysis of strong businesses has morphed into a rigorous process that blends both fundamental and technical analysis. While he still seeks out the strong businesses and dependable dividends he was attracted to early on, Bret has narrowed his focus to technology, automotive, and high-quality, high-growth businesses. In that effort, he seeks Future Blue Chips — which is also the name of his website and newsletter. Bret’s writing has sent him to unique places and events, like auto shows and industry conferences. Those excursions allowed him to fully grasp what Nvidia was showcasing at its GTC conferences and see some of the impressive updates on display at the automotive show. Through this he gained incredible insight into, and conviction in, what have become some of today’s best-performing stocks. It’s also allowed him to meet some very smart, very talented investors. Perhaps more than anything, their lessons, findings, and techniques have found a way into his process over the years. There are a million different ways to make money in the stock market. To find the process that works best for you is long and filled with setbacks. Bret’s hope is that part of his process can become part of yours; and together become better investors.
Unusual Options Activity in Apple, Home Depot and 8 Other Stocks
Apple, Home Depot, Merck and others lit up our unusual options activity this week.
Many investors brush off unusual options activity, but others like to “follow the flow.” When large investors — like hedge funds for example — make big moves in the options world, it shows up in a very interesting way. We refer to this as “unusual options activity” and it serves as a way to see what the big investors are doing.
Luckily there’s a leaderboard of options activity for both calls and puts and it helps us track all of the outsized volume.
There’s actually a leaderboard for ETFs too.
With that in mind, let’s look at the stocks that stuck out the most on the call side and the put side.
Apple (AAPL)
Starting with the biggest of them all, we have Apple (US:AAPL). The stock recently hit a one-month low, but it still commands a market cap in excess of $2.1 trillion.
Perhaps because it’s hitting new recent lows, someone appears to be loading up on protection. That’s as a series of put-buying hit the tape on Friday, Dec. 16th.
That’s as more than $50 million in premium was paid for the January 2023 $170 puts, which were more than $30 in-the-money. At the same time, $15.5 million was paid for the January 2023 $230 puts.
That said, there was an absolute flurry of heavy options activity in the January puts, so it could be part of a more complicated spread. Let’s also not forget that it was “quad-witch” expiration on Friday and a lot of this action could be a result of that.
Gilead Sciences (GILD)
Coming in at No. 1 on the unusual options leaderboard this week, Gilead Sciences (US:GILD) made a splash as one bullish trader was lighting up the January 2023 $62.5 calls. Over a span of several purchases, they bought almost $12 million worth of the calls, which expire in just over one month from now.
With the stock trading at $88 at the time, this was a deep-in-the-money play. At the same time, someone was busy buying even more than that, gobbling up millions of dollars worth of the $65 calls that expired on Dec. 16th.
Merck (MRK)
Showing up as No. 2 on this week's leaderboard, Merck (US:MRK) turned a few heads as select healthcare stocks continue to perform well.
That’s as someone paid more than $15 million for the January 2023 $90 calls. At the time, Merck stock was trading near $111 a share, putting these calls deep-in-the-money.
The trade came on Dec. 13th, just one day before the stock hit new all-time highs. This looks like a bullish bet on the trend continuing, potentially into year-end.
Home Depot (HD)
Home Depot (US:HD) comes in at No. 3 on this week’s leaderboard. That’s after a bullish put trade hit the tape on Dec. 15th. Shortly after noon, $4.4 million in put premium was collected by selling the February $290 puts, while shares were trading near $325.
About 20 minutes before that, the same puts were sold, collecting more than $2.57 million in premium. In total, almost $7 million in premium was collected for this trade.
Taiwan Semiconductor (TSM)
Often overlooked for Nvidia (US:NVDA), Intel (US:INTC) and other more well-known semiconductor companies, investors seem to forget Taiwan Semiconductor (US:TSM) is worth more than $400 billion.
Further, Warren Buffett has been a buyer of this stock.
With just two days until expiration, someone scooped up almost $5 million in the Dec. 16th $65 calls. The calls were deep-in-the-money, with shares trading above $80 at the time.
Morgan Stanley (MS)
Morgan Stanley (US:MS) is the only bank stock that made the list and comes after someone made a long-dated bullish bet.
That’s as one trader bought $3.19 million worth of the January 2025 $95 calls. Those calls were slightly out-of-the-money with Morgan Stanley trading at $92.65 at the time, and expire in more than 760 days.
Phillip Morris (PM)
Phillip Morris (US:PM) came in at No. 7 on this week's leaderboard after one trader made a bullish put trade.
With shares trading at roughly $100, one trader sold $2.62 million worth of the March $90 puts.
Bristol-Myers Squibb (BMY)
Like Merck, Bristol-Myers Squibb (US:BMY) recently hit new all-time highs this month, but the stock has pulled back hard over the last few weeks. Shares have fallen about 10% while declining in 8 of the past 10 sessions. The two “up days” in that stretch came on gains of just 0.01% and 0.08%, respectively.
One trader believes that pullback is an opportunity on the long side.
On Dec. 15th, they sold $569,000 worth of the February $72.50 puts, which were slightly out-of-the-money as BMY stock was trading at $76.
A day later, someone bought almost $170,000 worth of the $75 calls expiring on Jan. 6th, so they are looking for a bounce as well.
Walmart (WMT)
Like Bristol-Myers Squibb, traders are looking for a bullish opportunity in Walmart (US:WMT) after the recent pullback.
That’s as one trader collected $510,000 in premium for selling the September $125 puts. These puts were far out-of-the-money and currently expire in more than 120 days.
Coca-Cola (KO)
Last but not least, we have Coca-Cola (US:KO), which also had bullish put selling taking place this week.
Someone sold over $518,000 worth of the March $65 puts. Expiring in about 90 days, these puts were slightly in-the-money.
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