Institutional Trader Risks $70M On Bullish Chargepoint Options Trade

Justin Nugent

This article was last updated on 09/19/2022.

Chargepoint
chargepoint
Who’s behind the sudden swell of bullish unusual options activity in Chargepoint (CHPT)?
Source: Market Rebellion, Unsplash

In June of 2022, Market Rebellion covered the massive amount of unusual options activity identified in EV charging stock Chargepoint (CHPT). With Chargepoint at the bottom of a steep plunge, institutional call buyers stepped in with 12 big bullish purchases made over the course of 13 trading days, leading to a 56% run-up in the stock between May 23rd and June 8th.

chargepoint options
Bullish May-June UOA. Each green arrow represents a bullish option trade in Chargepoint (CHPT). 
Source: TradingView, Market Rebellion

After these purchases, the “smart money” trail of institutional call buying went cold — and so did the rally in CHPT. However, on September 2nd, the big bullish buying in CHPT began to accelerate once again — and so did shares of CHPT.

Unusual Options Activity
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Fresh Unusual Options Activity in Chargepoint (CHPT) — Bullish Call Buying

CHPT
Source: TradingView, Market Rebellion

During the bullish option onslaught from May-June, institutions risked a total of $33.8M. This time, the Chargepoint bull is risking more than double that amount

Over the past 9 trading days, Market Rebellion identified several massive call purchases totalling $12.227M in value. Additionally, Market Rebellion identified the sale of 35,000 short puts for a total collateral of $58.125M. When a trader uses a sell to open order to generate a short put position, they’re making a bullish bet that the stock will expire above the strike price of the short puts. In exchange, they’re promising to buy 100 shares per contract sold at that strike price in the event that they’re wrong. Short puts require collateral — the amount of money that the trader would need to have on hand if their bet goes awry.

In this case, the trader is promising to purchase 3.5 million shares of Chargepoint at strike prices ranging from $18 to $20. Altogether, between the short puts and long calls, this “smart money” Chargepoint bull risked more than $70.35M to make a series of very bullish bets.

CHPT Accelerates: Inside the Chargepoint Rally

Chargepoint
Source: TradingView, Market Rebellion

Between the outset of September 2nd’s bullish buying and September 15th’s close, shares of Chargepoint have risen by 32.87%. That’s a considerably better performance than the SPDR S&P 500 ETF (SPY), or the Invesco QQQ Trust (QQQ), which are both lower by -0.54% and -1.42% respectively over the same period. Even high-flyers within the same sector as Chargepoint, like Blink Charging (BLNK) and QuantumScape (QS) couldn’t keep up with Chargepoint’s supercharged rally. 

CHPT shares shook off a minor loss on the 13th before rising +3.65% and +5.89% on the following two days — proving that not even Tuesday’s CPI shock (the worst day for the stock market since June 2020) could put an end to Chargepoint’s high-octane run-up. 

Despite the already stellar performance by CHPT, this bullish buyer hasn’t given up yet — more than 64,000 call options were purchased in four trades on 9/15. All 64,000 bought on Thursday expire between 9/16 and 9/23. When we see huge trades made over a short time horizon again and again, that’s unusual unusual options activity.

What Drove Shares of Chargepoint Higher?

Two key things happened

On September 14th, the Biden administration announced approval for a plan that seeks to improve EV charging infrastructure in 35 states. The funds for that plan come from the Bipartisan Infrastructure Law signed in 2021, and will allocate $900 million in spending for EV charging stations. $4.1 billion in funds still remain for eventual deployment, and will be used to help create a national network of 500,000 EV charging stations. 

Then, on September 15th, Needham analyst Vikram Bagri began coverage on the EV sector, saying that the earnings and revenue forecasts for many EV names are “conservative” — implying that he thinks many EV names can outpace their predicted growth. Did the institutions who have been betting big on Chargepoint since September 2nd know about these back-to-back bullish developments? It’s possible. 

On a recent episode of 3@3, Market Rebellion Co-Founder Jon Najarian broke down the strategy that some institutional traders use to get ahead of announcements like the one from Needham on September 15th. 

“We like following big players in the market because we find that they are, more often than not, correct in their assumptions. In many cases, they have better intel than we have. That’s why we follow them. They have people at all of the investment conferences. They have been tipped off — not to insider information, occasionally that might happen — but that’s not the bulk of what we see. They may be tipped off to a brokerage upgrade or downgrade. If you knew a stock was about to be upgraded, and it’s not coming from the company, it is not “material non-public” information from that company. 

It is indeed one of the reasons that people pay hundreds of thousands, if not millions of dollars in commissions to their brokers. […] They do it because they want to get the “heads up” before an upgrade or downgrade. Now, many of us see that come across CNBC, Fox Business, Bloomberg – whatever. You see that a stock has been upgraded, or downgraded, or a new price target. But that does not mean that it has just hit the biggest and best customers at that moment. Those “biggest and best” probably got a little heads up before that. That’s why they do all those transactions through that broker — to get that intel.

Jon Najarian

CHPT Unusual Options Activity: Measuring the Trade’s Performance

While some of these options are set to expire in January 2023, we don’t have to wait to figure out how last week’s trades fared. The four trades listed below were bought between 9/02 and 9/09, and expire either today or last Friday.

Unusual options activity
Source: TradingView, Market Rebellion

As you can imagine, the high leverage of short-duration OTM options has treated these bullish options very well during CHPT’s recent 2-week 32% rally.

CHPT unusual options activity
Source: TradingView, Market Rebellion

These four short-dated unusual call purchases cost the institutional trader a combined total of $1,190,930. If none were sold, that amounts to a total value of $8,932,034, and a total maximum return of $7,741,104 (650%) by September 15th’s close. Moreover, these four trades make up only a handful of the many massive option purchases made in CHPT over the past 9 trading days.

Chargepoint: A Magnet for Unusual Options Activity in 2022

It’s easy to get lost in the large trade prices and big numbers when reading about unusual options activity. If you’re not someone who’s looking at option order flow on a regular basis, you might think that the institutions are flinging funds like this every day. They aren’t. Especially not on short-dated, OTM options in otherwise random high-beta, mid-cap stocks like Chargepoint. Market Rebellion sees tons of large, unusual option trades every day. These ones in Chargepoint are truly in a league of their own. 

Even if you’re a fund manager for one of Wall Street’s elite institutions, betting $70M on a short-term outcome is no laughing matter. $70 million in client funds is no drop in the bucket. If you end up being wrong, you’re going to have a serious problem on your hands. 

In short: Someone is putting a lot on the line here. 

But if you aren’t a Market Rebel with exclusive access to our proprietary unusual options activity algorithm, the Heatseeker ®, you’ll just have to take our word for it. 


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Tired of hearing about the unusual options activity after the institutions have already built their position? Ready to get in on the action? Market Rebellion does more than just provide a window into option order flow. Our professional option analysts filter it down, converting the most unusual of the unusual options activity into trade ideas rooted in technical analysis. Want to learn more? Check out this free video to peek inside our unusual options activity trading strategy.

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