Every Friday, I write about unusual options activity in the markets. Each week the subject matter’s different. Today, some call options with expiries between $30 and $60 caught my interest.
I’m not even sure why. I suppose it’s because there are a lot of interesting names in that $30-dollar spread.
So, for me, these are the three 30-to-60-day expiries that caught my attention.
Paramount Global (PARA)
Paramount Global (PARA) is the new name of the combined entity created with the merger of Viacom and CBS in December 2019. The powers that be felt the Paramount name held more sway with investors.
“Our strategy has always been to harness the strength of our traditional business to build something new. Paramount was always at the core of this vision. Today we are thrilled to announce that ViacomCBS has become Paramount Global, or simply Paramount,” stated Paramount chairwomen Shari Redstone in February.
While I understand getting rid of the Viacom name -- nobody ever associated it with anything -- CBS remains a top-rated network with the older crowds. I guess it had more to do with connecting its overall business to its Paramount+ streaming service, but that’s a subject for another day.
The August 19 $25 call is trading slightly in the money with 42 days to go until it expires. The bid price is $2.17, so Paramounts share price has to get to a little more than $27 by mid-August to break even.
Investors think it’s got a chance. Volume is 21,841 as I write this late in the day, 1.4x the open interest.
The only downside of this call option is that analysts are growing more conservative about Paramount’s ad revenue growth from streaming. On July 6, Guggenheim analyst Michael Morris cut his price target by $5 to $35.
“We have lowered our 2Q advertising outlook at the TV Media and DTC (direct-to-consumer) segments, reflecting incremental softness in the marketplace,” The Hollywood Reporter quoted Morris.
Despite these comments and the five-dollar target price cut, Morris still believes it’s a “buy.”
Beyond Meat (BYND)
There is no question that many investors view Beyond Meat (BYND) as a significant falling knife--it’s down 51% year-to-date and 77% over the past 52 weeks.
However, all that could change with the launch of the company’s whole-cut vegan steak, which CEO and founder Ethan Brown believes is one of Beyond Meat’s best products in its history.
Between this new steak product and its recently launched jerky line in partnership with PepsiCo (PEP), Beyond Meat still has a few tricks up its sleeve. In May, the company reiterated its 2022 revenue outlook of $590 million at the midpoint of its guidance.
Also, in May, the company announced that Kim Kardashian was its first Chief Taste Consultant. Kardashian will provide recipes and creative content for the company and appear in Beyond Meat ads.
“I’ve been focusing on going more plant-based and can tell you that Beyond Meat is my absolute favorite – I love how all their products not only taste amazing but are also good for me and my family,” Kardashian stated in the company’s press release.
The Kardashians show might be over, but Kim Kardashian continues to possess a massive social media audience. It should be good for bringing new customers to the table.
The August 19 $17.50 call is currently deep in the money. As a result, the bid price is $14.20, which means the breakeven price is about $31.60, where it’s currently trading.
With 42 days left until expiry, making this bet would suggest you don’t believe the markets will continue to fall much more.
GameStop (GME)
GameStop’s (GME) August 19 $170 call jumps out at me for all the wrong reasons. That’s because to make money on this call option; it’s got to get to about $177 to break even. That’s about 38% appreciation in six weeks.
Hey, I know GME stock is incredibly volatile, both up and down. Still, the latest news about it terminating its CFO after only a year in the role, combined with overall job cuts at GameStop, suggests Ryan Cohen’s not quite the savior the Reddit crowd believes he is.
In my opinion, GameStop pulled off the ultimate bait-and-switch move this week.
First, on Wednesday, it announced a 4-f0r-1 stock split that brought all kinds of trading action to GME stock. Then, it dropped the other shoe late Thursday by letting CFO Mike Rucepero go because he was supposedly “too hands-off.”
Ryan Cohen is quickly proving that he is not the savior of GameStop.
The company can spin this anyway it wants. The reality is that it hired more than 600 people in 2021 to make it a digital-first business. A year later, the company is reducing its so-called “bloat” because the upside from its NFT/Digital transformation isn’t happening nearly as fast as it thought it would, and now it’s throwing bodies overboard.
I wouldn’t say I like the odds of winning with this GameStop call option. The headwinds are too significant.
More Options News from Barchart
/Microsoft%20sign%20at%20the%20headquarters%20by%20VDB%20Photos%20via%20Shutterstock.jpg)
