Part I: A Review of Unusual Options Activity & Whales’ Strategies
On October 4th, 2021, among the underlying components of the NYSE, Pinterest, Inc. opened at $52.29.
Reported then were the following trades:
- A total of 3,000 contracts traded on the $50 strike put option at the bid, dated for December 17th, 2021.
- An additional 3,000 contracts traded on the $50 strike call option at the ask, for the same date.
The “line in the sand” would be an adequate statement by that Twitter user, as this strategy would be considered a synthetic long, wherein the put was sold and the call purchased, representing a bullish sentiment.
Be mindful! This strategy was built after the fact at the time of this writing, and data above would not necessarily represent the values when the trader entered this position.
Additional Unusual Activity That Followed
On October 13th, Pinterest, Inc. opened at $51.80, and we reported on further unusual options activity in its option flow that day:
- There were 10,070 contracts traded on the $57.5 strike call option, sold at the bid, dated for November 19th, 2021.
- Additionally, there were another 10,070 contracts traded on the $42.5 strike put option, bought at the ask, for the same date.
These orders came in as a cross trade, meaning a broker executed the orders by matching buy and sell orders across different accounts and then reported them on a singular exchange; because of this, it does not necessarily mean that a singular entity has taken this exact position.
Additionally, later that afternoon, there were even more floor trades that came through, which that same Twitter user also followed up upon, regarding this trade as “monstrous”.
In spite of these substantially bullish orders, that day, the flow revealed that, of premiums greater than $30,000 more, the majority of betting was short-term, dated for November 19th, 2021, with bearish premium overtaking bullish $51 million to $8 million respectively.
The most popular strikes were $52.5 and $50, with $52.5 having $39 million of premium betting compared to just $4.6 million of bullish betting.
Part II: Somebody Always Knows
On October 20th, 2021, there were reports that revealed:
PayPal Holdings Inc. was looking to buy digital pinboard site Pinterest Inc., Bloomberg News reported on Wednesday, citing people with knowledge of the matter.
According to the report, there was a potential price of $70 a share, which, as expected, sent Pinterest, Inc.’s stock price flying upwards...
Seen above is the chart for Pinterest, Inc., on October 20th, 2021, from TradingView, with the rightmost candles revealing the time of the news that PayPal Holdings, Inc. was in talks to purchase them.
As seen, call and put volume reached a new high on October 20th, 2021, after the news as traders rushed into take advantage of the volatility.
Of note, however, is the outright lack of volume on the dates of the floor trades detailed in this article above. The October 4th volumes are lost in the above chart, as Pinterest, Inc.’s call and put volumes at that time were operating around a relative mean.
Recent Unusual Activity & Betting Going Forward
On October 22nd, 2021, there were substantial bets being made on Pinterest, Inc., however its call volume had dropped to 184,532 from its new high of 500,887 on the 20th; regardless, the 22nd’s call volume was still 319% above the 30-day call volume average.
As seen, in spite of the aforementioned reports, bearish premium still accounts for 49.8% of the options chains, with 64.5% in calls, with calls representing 60.9% of the premium traded.
As compared to the betting on October 13th, there has been a dramatic switch in the largest whales’ betting behavior.
The most popular expiration date is now November 19th, 2021, with $33,126,693 in bullish premium and $28,348,442 bearish premium traded. The most popular strike are now the $60 strike contracts, with $21,857,808 bullish and $19,690,146 bearish premium traded.
Somebody always knows.
The Unusual Whales Flow caught every instance of unusual betting on Pinterest, Inc. prior to the catalyst.
Unusual Whales is working to level the playing field to make insider information less privileged and available to all.