End of another workweek, finally!
Remember when Joe Scarborough remarked on Morning Joe that some weeks drag endlessly? It’s just like that. Ever notice the most anticipated busy weeks end up feeling like a waiting game? The notorious Murphy’s Law playing tricks. Yet, amidst the midweek banter and bustle, the S&P 500 has been soaring, up 2.4%. Surging 10.51% in 2024 already, it outpaced the same milestone last year by two months. At this pace, the index could close the year with a jaw-dropping 42% gain.
Mulling over today’s writing topic, a fascinating discovery emerged from the unusual options activity (UOA) on Thursday.
In a rare twist, three companies dominated the top 10 options list by Vol/OI ratio with two entries each. On Holding (ONON) secured the top two spots, Micron Technology (MU) claimed 7th and 8th positions, while Meta Platforms (META) tied for the 10th. Out of 1,315 options with Vol/OI ratios exceeding 1.25, these three stocks accounted for 85, showcasing substantial investor interest, primarily from Micron and Meta.
This concentrated attention hints at significant market moves ahead. Among the six notable options, here are three worth a closer examination.
A Deep Dive into On Holding
Switzerland’s On Holding offers the September 20 $35 call and put options. The call boasts a Vol/OI ratio of 86.53, with an ask price of $5.55, enabling the purchase of 100 ONON shares at $40.55, a 14% premium.
Although the high down payment may deter some, a delta of 0.61767 suggests potential for doubling or 50% gains on a share price surge. Conversely, the $3.95 bid price for the put yields 22.3%, offering a cost-effective entry at $31.05, 13% below the current price.
Considering analysts’ optimistic stance with a ‘Strong Buy’ rating, On Holding remains a favorable choice, despite recent earning hiccups. While poised for revenue growth, its rich valuation calls for cautious optimism, favoring calls over puts for most investors.
An Insightful Look at Micron Technology
Micron Technology shines with 58 of the 85 standout UOA options. Among its top picks, the March 28 $105 put and April 19 $110 put present intriguing opportunities.
With robust analyst backing and technical signals pointing to a ‘Strong Buy,’ Micron remains a solid bet. The $105 and $110 puts offer attractive yields, with the latter holding even more substantial income potential. A prudent choice between the two puts depends on one’s view on owning MU.
The risk/reward profile looks promising, making both put options appealing for investors.
Unveiling Potential in Meta Platforms
Before diving into Meta Platforms’ UOA options, behold Mark Zuckerberg relishing 2024. The CEO’s staggering $52 billion increase in net worth speaks volumes about his excitement for the year ahead.
Meta Makes Waves: A Financial Dissection
The Rise of Meta
Meta’s founder has amassed immense wealth this year, already ranking as the fourth wealthiest individual globally before even reaching his 40th birthday on May 14.
Options Analysis
Within the top 10, Meta presented two intriguing options: the June 18/2026 $370 call and the May 17 $530 put, showcasing a significant contrast in expiry dates.
Market Speculation
The $370 call had an ask price of $206.70, indicating a notable 56% downpayment, culminating in a total purchase price of $576.70 if exercised in 2026. This stands 14% higher than Thursday’s closing price of $507.76.
Despite recent successes in cost-cutting and ad sales, leading to a 153% surge in share price, analysts predict more growth for Meta. The majority rate it a “Strong Buy,” with a free cash flow yield of 3.5%, slightly under the suggested 4.0% mark.
Financial Outlook
The $530 put option held a bid price of $44.70, yielding an annualized 57.4%. Selling these puts would result in a net price of $485.30, 4.4% lower than the current trade value, potentially remaining lucrative over upcoming weeks.
Albeit Meta’s promising future outlook, neither option appears ideal for investment distribution, requiring meticulous consideration before allocating capital.
On the date of publication, Will Ashworth did not hold any positions related to the securities discussed. The content provided is purely informative. For further details, refer to the Barchart Disclosure Policy.
The viewpoints expressed herein belong to the author and may not mirror the opinions of Nasdaq, Inc.
