Latest news with #BarchartUnusualStockOptionsActivityReport
Globe and Mail
30-04-2025
- Business
- Globe and Mail
Marvell Technology's Unusual Put Option Activity Shows Investors Like MRVL Stock
Today, large, unusual activity in Marvell Technology Inc (MRVL) put options traded at an out-of-the-money (OTM) strike price. This implies that investors are bullish on MRVL stock. Moreover, its strong free cash flow (FCF) implies that MRVL stock could be worth 32% more at $75 per share. MRVL is at $57.00 in morning trading on Wednesday, April 30. That is well off its 6-month high of $126.06 on Jan. 23, but up from a low of $49.43 on April 4. Marvel stock could be worth considerably more, as will be seen in this article, based on its strong free cash flow (FCF). This might become apparent when the company releases its FY Q1 2026 results on May 29. Barchart Unusual Options Report Moreover, as seen by today's options activity, some institutional investors are betting that its lows have already been reached. This can be seen in the Barchart Unusual Stock Options Activity Report today. It shows that a large tranche of out-of-the-money puts traded at the $48.00 strike price for expiry in just over 2 weeks (May 16). The strike price is well below today's trading price of $57.00 (i.e., out-of-the-money or OTM). The table above shows that 4,500 put contracts traded with a midpoint premium of 70 cents. That implies that an investor who sold these puts short (i.e., entered an order to 'Sell to Open') would have made an immediate yield of 1.46% (i.e., $0.70/$48.00 = 0.01458). In other words, the investor is getting paid for the potential assignment risk of having to buy shares at $48.00, which is 15.7% below today's price. There is very little risk of this happening as evidenced by the low 14.1% delta ratio (based on historical volatility patterns). Nevertheless, the investors are still paid this 1.46% for this short-put play. Moreover, the breakeven price, even if MRVL falls to $48.00 in the next two weeks, is low at just $47.30 (i.e., $48.00-$0.70 income received). That is 17% below today's trading price. Strong Free Cash Flow (FCF) and Higher Target Prices On top of this, Marvell stock looks very cheap even at today's price. This is based on its strong free cash flow (FCF) results. For example, last quarter ending Feb. 1, 2025 (from its March 5 earnings release), Marvell Technology, which designs and produces system-on-a-chip semiconductors increasingly used in data center servers for AI applications, generated $514 million in operating cash flow. After spending $70.7 million in capex and technology licenses, its 'free' cash flow (FCF) (i.e., free to be spent on dividends, buybacks, etc.) was $443.3 million. That represented 24.4 % of its revenue, indicating a very high FCF margin. Moreover, for the fiscal year ending Feb. 1, its $1.34 billion FCF represented a FCF margin of 24.1% of its $5.767 billion in revenue for the year. As a result, investors can be reasonably confident it will produce at least a 24.1% FCF margin over the next year. For example, analysts now project revenue of $8.21 billion this year ending Jan. 31, 2026. That represents an increase of 42%. Using a 24.1% FCF margin estimate, the company's projected free cash flow is almost $2 billion: 0.241 x $8.21b = $1.98 billion est. FCF As a result, using a 3.0% FCF yield metric (typical for this stock and other tech stocks and the same as a 33x FCF multiple), the value of MRVL stock is: $1.98b / 0.030 = $66.0 billion That is $16 billion higher (+32%) than Marvell Technology's present market cap of $50 billion. In other words, the MRVL target price is 32% higher at $75.24 per share. Analysts Agree MRVL Stock is Cheap Analysts also agree MRVL stock looks undervalued here. For example, 39 analysts surveyed by Yahoo! Finance have an average price target of $103.36 per share. Similarly, Barchart's mean is $111.79 per share. Moreover, which tracks analysts who have written recently on MRVL stock, shows an average price target of $73.82 from 30 analysts. That is close to my FCF-based price target of $75.24. The bottom line is that MRVL stock looks deeply undervalued here. No wonder, then, some institutional investors are shorting these deep out-of-the-money put options. The 1.46% short-put yield, 17% lower breakeven price, and high price targets make this a worthwhile bet for these bullish investors.
Globe and Mail
30-04-2025
- Business
- Globe and Mail
Marvel Technology's Unusual Put Option Activity Shows Investors Like MRVL Stock
Today, large, unusual activity in Marvel Technology Inc (MRVL) put options traded at an out-of-the-money (OTM) strike price. This implies that investors are bullish on MRVL stock. Moreover, its strong free cash flow (FCF) implies that MRVL stock could be worth 32% more at $75 per share. MRVL is at $57.00 in morning trading on Wednesday, April 30. That is well off its 6-month high of $126.06 on Jan. 23, but up from a low of $49.43 on April 4. Marvel stock could be worth considerably more, as will be seen in this article, based on its strong free cash flow (FCF). This might become apparent when the company releases its FY Q1 2026 results on May 29. Barchart Unusual Options Report Moreover, as seen by today's options activity, some institutional investors are betting that its lows have already been reached. This can be seen in the Barchart Unusual Stock Options Activity Report today. It shows that a large tranche of out-of-the-money puts traded at the $48.00 strike price for expiry in just over 2 weeks (May 16). The strike price is well below today's trading price of $57.00 (i.e., out-of-the-money or OTM). The table above shows that 4,500 put contracts traded with a midpoint premium of 70 cents. That implies that an investor who sold these puts short (i.e., entered an order to 'Sell to Open') would have made an immediate yield of 1.46% (i.e., $0.70/$48.00 = 0.01458). In other words, the investor is getting paid for the potential assignment risk of having to buy shares at $48.00, which is 15.7% below today's price. There is very little risk of this happening as evidenced by the low 14.1% delta ratio (based on historical volatility patterns). Nevertheless, the investors are still paid this 1.46% for this short-put play. Moreover, the breakeven price, even if MRVL falls to $48.00 in the next two weeks, is low at just $47.30 (i.e., $48.00-$0.70 income received). That is 17% below today's trading price. Strong Free Cash Flow (FCF) and Higher Target Prices On top of this, Marvel stock looks very cheap even at today's price. This is based on its strong free cash flow (FCF) results. For example, last quarter ending Feb. 1, 2025 (from its March 5 earnings release), Marvel Technology, which designs and produces system-on-a-chip semiconductors increasingly used in data center servers for AI applications, generated $514 million in operating cash flow. After spending $70.7 million in capex and technology licenses, its 'free' cash flow (FCF) (i.e., free to be spent on dividends, buybacks, etc.) was $443.3 million. That represented 24.4 % of its revenue, indicating a very high FCF margin. Moreover, for the fiscal year ending Feb. 1, its $1.34 billion FCF represented a FCF margin of 24.1% of its $5.767 billion in revenue for the year. As a result, investors can be reasonably confident it will produce at least a 24.1% FCF margin over the next year. For example, analysts now project revenue of $8.21 billion this year ending Jan. 31, 2026. That represents an increase of 42%. Using a 24.1% FCF margin estimate, the company's projected free cash flow is almost $2 billion: 0.241 x $8.21b = $1.98 billion est. FCF As a result, using a 3.0% FCF yield metric (typical for this stock and other tech stocks and the same as a 33x FCF multiple), the value of MRVL stock is: $1.98b / 0.030 = $66.0 billion That is $16 billion higher (+32%) than Marvel Technology's present market cap of $50 billion. In other words, the MRVL target price is 32% higher at $75.24 per share. Analysts Agree MRVL Stock is Cheap Analysts also agree MRVL stock looks undervalued here. For example, 39 analysts surveyed by Yahoo! Finance have an average price target of $103.36 per share. Similarly, Barchart's mean is $111.79 per share. Moreover, which tracks analysts who have written recently on MRVL stock, shows an average price target of $73.82 from 30 analysts. That is close to my FCF-based price target of $75.24. The bottom line is that MRVL stock looks deeply undervalued here. No wonder, then, some institutional investors are shorting these deep out-of-the-money put options. The 1.46% short-put yield, 17% lower breakeven price, and high price targets make this a worthwhile bet for these bullish investors.
Globe and Mail
09-04-2025
- Business
- Globe and Mail
Huge Unusual Trading in Pfizer Put Options Signals Investors' Bearish Outlook
Large, unusual trading volume in Pfizer Inc. (PFE) put options is accruing today, signaling a bearish outlook by institutional investors in PFE stock. This undoubtedly relates to the Chinese tariffs, and investors' concerns. PFE stock is down 2.82% today to $21.20 after the Chinese authorities signaled a 104% hike in retaliatory tariffs after the U.S. Administration's recent tariff hikes on China. Since March 7, PFE stock has dropped from $26.73, a fall of over 20.5%. This latest round of tit for tat tariff hikes between the two countries could take an outsized toll on Pfizer. It has a state-of-the-art manufacturing facility and research centers in China. Moreover, news reports emerged today indicating that the Trump Administration is going to target drug imports. That is another escalation in the trade war that could harm Pfizer's sales. As a result, there is a large volume of Pfizer put options today. Barchart Report - Pfizer Put Options The Barchart Unusual Stock Options Activity Report today shows huge increases in nearby put options activity in PFE stock. This can be seen in the table below. The table shows that the May 2 expiry period has had over 12,000 put contracts traded at the $20.00 strike price. That is below today's trading price, making it an out-of-the-money (OTM) play (i.e., about 5.7% OTM). But the premiums are still high at $0.75 per contract. This means that a buyer of these puts expects that PFE stock will fall to at least $19.24, or over 9.2% from today's midday trading price, over the next three weeks: $19.24 / $21.20 -1 = 0.9074 -1 = -0.0925 = 9.25% downside It also means that a short seller of these puts can make at least a 3.65% yield, i.e., on the bid side: $0.73/$20.00 = 0.0365 = 3.65% short-put yield In addition, this also means their breakeven price is $20-$0.73, or $19.27, which is 9.1% below today's trading price. Downside Risks These are attractive returns to short sellers. However, all bets are off if the Trump Administration keeps hiking tariffs that could impact Pfizer's sales. For example, analysts are already forecasting lower revenue for the year ending 2025. Last year, Pfizer made $63.63 billion in sales, but analysts are projecting just $62.9 billion this year. If analysts keep cutting sales projections, this could have a huge knock-on effect on earnings, cash flow and the outlook for the stock's valuation. Moreover, the market tends to act first and ask questions later. If the upcoming April 29 earnings release shows any guidance for sales weakness, there could be another downturn in PFE stock. That could be why these May 2 puts are popular with bearish investors right now. As a result, investors should be careful about shorting these OTM puts just yet, despite the high yield. One way to hedge on the downside is to buy further OTM puts. For example, the investor who shorts these $20 puts for 73 cents could also buy a $19.00 put for 52 cents on the ask side, for a net credit of 21 cents, or a 1.05 net yield (i.e., $0.21/$20.00). That means that the net exposure is $1.00 (i.e., $20-$19.00), less $0.21, or $0.79. That means that if the stock falls between $19.79 and $19.00 on or before May 2, the investor could end up with a loss. As a result, it could be a risky trade to short-sell these OTM PFE puts. Moreover, if put option buyers are right, and PFE stock is set to fall significantly further, shorting OTM puts here could be costly. Investors should study these risks by going to the Barchart Learn Center to study Options Trading Risks.
Globe and Mail
26-02-2025
- Business
- Globe and Mail
Hims & Hers Health Sparks Investors Interest with Unusual Options Trading
Hims and Hers Health Inc. (HIMS) produced sterling results on Feb. 24, spurring huge interest in HIMS call options trading. Barchart reported an unusual volume today in HIMS call options that expire on March 14. HIMS is trading at $44.27 in morning trading on Wednesday, Feb. 26, up 11%. This was the result of huge investor interest in this $10 billion market cap company which sells GLP weight-loss compounds, and other telehealth-based products. As a result, the Barchart Unusual Stock Options Activity Report showed that over 1,000 call option contracts were traded at the $43.00 strike price for expiration on March 14. That was over 10x the prior number of outstanding contracts in this particle call option tranche. The investor interest in this call option has pushed the midpoint premium to $3.93 per call contract. That implies that in the next 16 days, the call option buyers hope to see HIMS stock rise to $46.93 or higher, in order for this call option to eventually have any intrinsic value. In other words, they want to see HIMS stock rise by 6.39% (i.e., $46.93/$44.11 price today) or higher in the next two weeks. That could be possible if the stock continues on its upward trajectory. On the other hand, the short-sellers of this particular call option tranche can make an immediate yield of 8.39% (i.e., $3.70 bid / $44.11). That is a very good two-week short sale yield for any investor who buys 100 shares for $4,411 and then sells these calls to make $370 per call contract shorted. Let's see what is driving the enthusiasm in HIMS stock. Strong Revenue and Free Cash Flow (FCF) Hims and Hers Health said its Q4 revenue rose 95% YoY and its full-year sales (mostly subscriptions) were up +69% YoY. Apart from its weight-loss product subscriptions, the company's sales were up 43% YoY. More importantly, the company is now solidly profitable on a free cash flow (FCF) basis. It reported that FCF was $59.5 million in Q4, up from $10.8 last year. That represented a solid FCF margin of 12.36 of its Q4 sales of $481.1 million. For the full year, its $198 million in FCF was 13.4% of its $1.477 billion in sales. That implies that the company's future sales growth could bring in huge increases in FCF. For example, analysts now project $2.32 billion in sales this year and $2.66 billion in 2026. That means that on a run-rate basis, its next 12 months (NTM) revenue could average $2.49 billion. Here is what that implies for FCF: 13% FCF margin x $2.49 b NTM sales = $323.7 million FCF Price Targets for HIMS Stock As a result, using a 2.0% FCF yield metric (i.e., 50x FCF multiple), the stock could potentially reach $16.18 billion: $323.7 million x 50 = $16,185 million = $16.18 billon $16.185/ $9.877 billion mkt cap today = 1.639 = +63.9% higher market value That means that a solid price target is $72.29 per share Analysts agree. For example, reports that Maria Ripps of Canaccord raised her price target from $63.40 to $68 per share after the company reported its earnings. The bottom line is that investors are keen on HIMS stock because of its strong earnings and FCF results. That could be why there is such huge interest today in these call options in HIMS stock.
Globe and Mail
19-02-2025
- Business
- Globe and Mail
Palantir Shows Huge, Unusual Put Options Trades - Investors Bullish on PLTR Stock
A Barchart report shows a large, unusual volume of put options in Palantir Inc. (PLTR) stock for expiration on Friday. The puts are out-of-the-money (OTM), implying investors are bullish on PLTR stock. For example, by shorting OTM puts, these investors can get paid by setting a lower potential buy-in price. I discussed PLTR's recent rise in a Barchart article on Sunday, Feb. 16: ' Palantir Stock Keeps Rising, Confounding Analysts - What Should Investors Do? ' At the time, PLTR was at $119.16, but today it's trading for $123.11 at the market open. My article points out that analysts have been wrong so far on PLTR. I showed how it could be worth as much as $137.39 - although that may take some time. Today's large volume in put options with strike prices below the trading price (i.e., out-of-the-money), implies that some investors are willing to buy large amounts of shares if PLTR falls to this lower price. The Barchart Unusual Stock Options Activity Report— see below—shows two tranches of put options with heavy volume that expire on Friday, February. 21. Investors Put Plays Show a Bullish Stance on PLTR Stock For example, 14,653 put contracts, each representing 100 shares per contract, traded at $123.00, which is right at the market (ATM). This was 126 times the prior outstanding put contracts at this strike price. However, the investors who sold these puts to the buyers have received a premium of $2.33 at the midprice. That means the breakeven price is 2% lower: $123.00-$2.33 = $120.67 breakeven price $120.67 / $123.11 trading price -1 = -.0198 = i.e., 2% below the trading price Moreover, the investor's short-put yield at this strike price is almost 1.90%: $2.33/$123 = 0.0189 = 1.89% In addition, the second tranche has a lower strike price of $122, but the midprice premium was $1.94. That provides the short sellers a good yield of 1.59% and a lower breakeven: $1.94 / $122 = 0.0159 = 1.59% Breakeven = $122-$1.94 = $120.06 = 2.47% below trading price The second tranche of puts has a better chance of not getting assigned, so the short-put yield is slightly lower. But consider this. The investors who sold these puts must be willing to have their account assigned to buy shares at $122, which is only $1.00 below today's trading price. That is why there is a delta ratio of -69.53 - implying a good 70% chance this will happen. In other words, these investors are likely to have to buy shares at these strike prices. That means they are bullish on PLTR stock. Why PLTR Stock Keeps Rising In my Feb. 16 Barchart article, I explained why PLTR is confounding analysts. The bottom line is that Palantir's free cash flow (FCF) growth and FCF margins are accelerating as its revenue rises. That is known as operating leverage. That will push up its FCF margins even higher than its 63% level last quarter. As a result, the future value of PLTR stock, on a FCF yield basis, rises commensurately. I showed how this works in the article. Analysts don't quite understand this, but many are waking up, as I pointed out. AnaChart's survey shows that the average of 15 analysts' price targets is $125.30. I pointed out in my article that one way to play PLTR stock is to short deep out-of-the-money (OTM) put options. That way investors can get paid while potentially waiting for PLTR stock to drop to a lower buy-in level. The bottom line is that PLTR stock is attracting large speculative activity today in put options activity. It shows that some large institutional investors are willing to buy the shares at roughly today's price, albeit getting paid in short-put plays at out-of-the-money breakeven prices.
