To The Moon

The biggest pain point for stock investors is the inability to track the movements of large funds in real-time. Although fund companies disclose their stock purchases and sales through 13F filings every quarter, these are still backward-looking reports. Given the different trading styles of various funds, investors find it difficult to grasp where the money is actually flowing. Funds may have already adjusted their positions by the time of disclosure, with even investment giants like Berkshire Hathaway significantly reshuffling their holdings within a single quarter.

As such, the ability to directly track large order flows has become a major advantage of options trading. The now-famous story of the "NVIDIA $200 Million Whale" is likely familiar to veteran options traders. We have tracked this legendary investor's four roll operations this year, with their capital growing from $150 million to $800 million. This is undoubtedly more reliable than 13F filings. Apart from NVIDIA, what other companies have seen their call options heavily accumulated by large funds?

Next, we will introduce four other investors on par with the "NVIDIA $200 Million Whale" in terms of fame. The heavy call option accumulation in these five companies undoubtedly represents the cream of the crop among bull stocks, expected to maintain strong growth momentum in their upcoming earnings reports.

$Taiwan Semiconductor Manufacturing(TSM)$

Taiwan Semiconductor and NVIDIA can be considered mutually reinforcing stocks. AI chip production is entirely dependent on TSMC's capacity, while demand for AI chips brings TSMC a steady stream of orders. NVIDIA's strength translates into TSMC's strength, and TSMC is similarly bullish this quarter.

Notably, the roll operation of the TSMC call option whale bears similarities to that of NVIDIA. This year, we have tracked the following three roll operations:

$TSM 20240216 95.0 CALL$   roll $TSM 20240517 100.0 CALL$  

$TSM 20240517 100.0 CALL$   roll $TSM 20240517 120.0 CALL$  

$TSM 20240517 120.0 CALL$   roll $TSM 20240621 140.0 CALL$  

To state the result directly, calculating from the January 18 roll, the $TSM 20240216 95.0 CALL$  involved 15,000 contracts worth $238.9 million. By March 8, when rolled to the $TSM 20240621 140.0 CALL$ , the position had expanded to 65,000 contracts worth $1.25 billion. Within just 2 months, the capital had increased fivefold. This position remains unexited.

The roll whale also provided us with a small trick: looking back at the historical option daily charts, each roll operation occurred at the peak of the stock price. At this point, the trader would exit and roll the expiration out by 1-2 months, keeping it above 3 months. This is because after each price surge and pullback, the option buyer experiences only decay with no profit for a period. Rolling out to a longer-dated expiry can mitigate excessive time decay to some extent. This operation is a valuable reference for call option buyers within a 3-month horizon.

$NVIDIA Corp(NVDA)$

The $NVDA 20240621 880.0 CALL$  needs no introduction – the illustrious "$200 Million Whale" with four roll operations under its belt. Based on the strike price, NVIDIA's stock price is likely to surpass $1,000 in the upcoming earnings report.

For investors bullish on NVIDIA but finding the options too expensive, there are three solutions: 1) buy NVIDIA stocks directly; 2) buy the $GraniteShares 2x Long NVDA Daily ETF(NVDL)$ ; 3) buy longer-dated at-the-money call options on NVDL.

$Meta Platforms, Inc.(META)$

Since TikTok was deemed a "thorn in the eye" by the US, META has emerged as the globally dominant social media platform, granted a degree of growth exemption through political backing. Call option whales have adopted a relatively relaxed attitude towards META, primarily buying long-dated LEAPS $META 20251219 600.0 CALL$  Calls.

An additional bullish signal is a longer-dated roll operation: exiting the $META 20260618 950.0 CALL$  Calls and rolling to the $META 20260618 1030.0 CALL$  Calls, with 95,000 contracts traded at a value of $200 million. This roll from higher out-of-the-money strikes to even higher ones suggests the whale believes the previous leverage was insufficient and has decided to significantly increase the bet.

$Amazon.com(AMZN)$

Goldman Sachs downgraded Pinduoduo ahead of its earnings, citing the potential impact of the H.R. 7521 bill passed by the US House Committee on Energy and Commerce on Pinduoduo's cross-border business. So who stands to benefit? With the booming US economy, high employment levels, stable inflation, and robust consumer spending, the biggest beneficiary is undoubtedly Amazon, the largest US e-commerce company.

Option data shows a whale exiting the $AMZN 20240315 145.0 CALL$  Calls and rolling to the $AMZN 20240621 160.0 CALL$ Calls, with 155,000 contracts traded at a value of around $300 million.

Judging by the strike price, this operation carries a bullish expectation similar to buying the underlying stock. If bullish on Amazon's earnings, one can either purchase the stock or sell put options at the 180 or 185 strikes.

$Microsoft(MSFT)$

Entering the second quarter, the software and hardware sectors began diverging. As more software companies entered the AI space, Microsoft adopted a lower profile, and its stock also became relatively muted. However, lurking beneath this subdued performance were call option whales:

The $MSFT 20240315 350.0 CALL$  Calls were rolled to the $MSFT 20240517 380.0 CALL$  Calls, with 40,000 contracts traded at a value of $170 million.

This implies the whale expects Microsoft's stock price to rise above $420 after the upcoming earnings report. Similar to Amazon, if bullish on Microsoft's earnings, one can consider holding the stock or selling at-the-money put options.