Unusual Option Talks? Military-industrial Up, Foods Down?
In unusual options activity on October 9th, market focuses were in: the Israel-Palestine conflict, the impact of weight loss drugs on consumer companies, and the strength of big tech stocks in the current macroeconomic environment.
Since the Israel-Palestine conflict, there has been a significant increase in the unusual activity of defense stocks, with the leader $Lockheed Martin(LMT)$ seeing a notable rise in option IV. It surged more than 8% in the most recent trading day, attracting more bullish sentiment.
The 450 strike CALL options expiring this week became the most prominent unusual order. Due to the lower IV and price before the sudden surge, it attracted many Covered CALL orders. At the same time, many speculators bet small to win big, deepening the game at this price level.
Similarly, there were CALL options at the $75 strike for $Raytheon(RTN)$ . In other words, many investors may consider these two positions as the limits for the week. However, each time such a military conflict stimulates defense stocks, it usually lasts only a few days, and in the long run, it is not a sustainable bullish reason.
Companies related to network security and information security may also benefit. For example, $Palantir Technologies Inc.(PLTR)$ and $Palo Alto Networks(PANW)$ saw some out-of-the-money PUT orders at around 10% below the current price, with a higher number of investors selling PUT options.
Another key focus, which has been ongoing in the market for the past few days, is the impact of weight loss drugs. It is said to have a significant impact on consumer goods, especially snack manufacturers, because both $Eli Lilly(LLY)$ and $Novo-Nordisk A/S(NVO)$ ‘s product work by reducing patients' appetite, which is naturally bearish for these high-calorie food producers. Similar large orders include $Mondelez(MDLZ)$, where PUT options with a strike price of $55 expiring in June next year have appeared, and $Kroger(KR)$
Finally, $Meta Platforms, Inc.(META)$ has recently been one of the strongest among big tech companies, mainly due to its relatively favorable environment and the fact that the company's assets are primarily in USD, making it more beneficial in the context of rising US bond interest rates. A significant amount of unusual PUT activity has occurred near the strike price, indicating a high possibility of continued upward movement.
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Palantir will receive handsome orders from the defense forces around the world in the light of the Hamas attack on Israel. A great data analytic software manufacturing company. Good Luck Investors.... see you at $25.00 plus....
LMT is developing a laser version of Iron Dome. Not sure if it is already deployed. Depending on what the post-action analysis shows, but if the LMT system performed well expect stock to go way up.
If you want to invest in government contractors (because you thing gov spending is going to go even higher?) then there are plenty of great companies to invest in. There are defense contractors (LMT or NOC) and non-defense like (ACM or J).
Pltr continues its March forward. Looking forward to seeing earnings at the end of the month
Bullish meta. This company is a cash cow with interest rates currently.