To The Moon

It seems this year's trend is to move in one big swing, just like Tesla, and now Chinese stocks as well.

$KraneShares China Internet ETF (KWEB)$

Those trading the major KWEB flows on Wednesday likely didn't expect them to be realized the very next day.

The two main KWEB flows were an outright call buy and a short straddle.

The call buy was in the $KWEB 20241101 33.0 CALL$ . They just closed it out and rolled to the $KWEB 20241018 36.0 CALL$ .

We've discussed before that institutions tend to take profits on outright bullish options by rolling to higher strikes for calls, or lower strikes for puts.

This allows them to 1) lock in a good portion of gains, and 2) the new higher/lower strike options are cheaper, allowing them to keep riding the trend.

For those struggling with when to take profits on bullish trades while avoiding exiting too early, this rolling strategy could be worth considering.

Additionally, the new expiration date for this roll is quite intriguing.

Typically, rolls keep the same expiration or go further out. But this flow brought the expiration closer, from November to October 18th.

This suggests the trader believes if the rally is going to continue, it will happen in the next couple days. If there are no further upside signs after that, time decay will start eating into the option premium heavily, so there's no need to spend extra on longer-dated options.

At these price levels, the fish-body portion of the move appears complete. There may or may not be a small fish-tail left.

Those holding stock positions can continue holding or rotate into names that haven't run up yet. Option holders could consider emulating this roll strategy. Sellers will likely have an edge from here.

The other major flow was a short straddle:
Sold $KWEB 20241018 32.0 CALL$ 
Sold $KWEB 20241018 28.5 PUT$ 

Perhaps institutions didn't expect the one-step move without any consolidation either. This strategy could serve as a reference for put strike selection.

$iShares China Large-Cap ETF (FXI)$
Wednesday's major FXI flow was selling the November $35 calls: $FXI 20241115 35.0 CALL$ 

$JD.com (JD)$
Bought $JD 20250117 40.0 CALL$ 
Sold $JD 20250117 50.0 CALL$ 

With the current price around $37, there may still be some further upside potential, similar to the Pinduoduo bullish call spread from yesterday.

$Nvidia (NVDA)$
Institutions rolled their covered calls, selling $NVDA 20241004 130.0 CALL$ 
Micron's positive earnings should be supportive for Nvidia, so continuing to hold seems prudent.

$Tesla (TSLA)$
Goldman is out touting Tesla options again: Suggesting buying the $TSLA 20241025 255.0 CALL$  for around $20, with a breakeven around $270. Open interest sits at 1,201 contracts.

But looking at the major recent flows sorted by volume, they were all outright sell calls at the $260 strike, plus the $270 calls I mentioned yesterday.

Upon further inspection, these $260+ call sales don't seem to be from the same traders regularly rolling covered calls that we track.

Given the above, Goldman's bullish option recommendation feels extremely ill-timed. Maybe they should stick to managing their personnel instead.