Big Unusual Call Buying in the Energy Sector — Pete Najarian

Pete Najarian visited CNBC’s Halftime Report today to speak about a market on edge. With a Nasdaq that’s entered bear market territory, can Microsoft and Google save the day? 

That’s what anchor Scott Wapner asked Pete to open the show. His answer: 

“Microsoft and Alphabet need to show us something big. Or else the direction just continues south.”

So can they pull off an upset in the fourth quarter? It’s possible, but according to Pete, the options market isn’t really buying that outcome.

“We’re seeing a lot of in the options world right now. We’re seeing puts being bought in a lot of different areas of the market that we haven’t seen in a while.” 

As Josh Brown would go on to put it, “the hiding places don’t work anymore.” 

But maybe the options market, lead by the ‘smart money’, can show us some new places to hide, at least temporarily. That’s what Pete was looking to shine a light on today, when he pointed out “an incredible amount of energy calls starting to hit on this pullback in oil!” 

We’ll get into some of those energy names in a moment, but first, let’s break down some unusual call buying that Pete’s seen in this fast food name currently sitting at multi-year lows. 

Wendy’s ($WEN) Calls

# of contracts purchased: 10,800
Strike: $22
Expiration date: May 20th, 2022 (Earnings on May 11th)
Cost per contract: $0.15-$0.30
Total trade cost: $243,000
Stock price: $20.40

Plug Power ($PLUG) Calls

# of contracts purchased: 7,500
Strike: $23.50
Expiration date: May 20th, 2022
Cost per contract: $1.63-$1.75
Total trade cost: $1,267,500
Stock price: $22.13

Separately, another big purchase a bit further out.

# of contracts purchased: 4,000
Strike: $27.50
Expiration date: June 17th, 2022
Cost per contract: $1.14
Total trade cost: $456,000
Stock price: $22.22

Energy Transfer ($ET) Calls

# of contracts purchased: 30,000
Strike: $11.50
Expiration date: May 6th, 2022 (Earnings on May 4th)
Cost per contract: $0.30
Total trade cost: $900,000
Stock price: $11.32

This looks like a double-down on unusual call buying that we saw yesterday:

# of contracts purchased: 30,000
Strike: $12
Expiration date: May 6th, 2022 (Earnings on May 4th)
Cost per contract: $0.08-$0.09
Total trade cost: $255,000
Stock price: $10.75-$10.89

General Motors ($GM) Calls

General Motors was Pete’s final trade, and there’s a good reason for that: this name had not one, not two, but three “monstrous buys” today. The legacy auto-turned EV name is set to report earnings tonight.

# of contracts purchased: 11,450
Strike: $45
Expiration date: September 16th, 2022
Cost per contract: $2.00
Total trade cost: $2,290,000
Stock price: $38.48

# of contracts purchased: 10,000
Strike: $39
Expiration date: May 6th, 2022
Cost per contract: $1.40-$1.55
Total trade cost: $1,475,000
Stock price: $38.06-$39.00

# of contracts purchased: 10,000
Strike: $43
Expiration date: June 17th, 2022
Cost per contract: $1.26
Total trade cost: $1,260,000
Stock price: $38.78

Listen to what else Pete had to say about the onslaught of unusual call buying today in the clips below!