Unusual Options Activity in 2 FAANG Stocks Ahead of CPI, Midterms

In the midst of a >2% down day, the smart money was betting big on a swift reversal in two ad-sensitive names.

Justin Nugent

This article was last updated on 11/11/2022.


The stock market experienced a stunning reversal on November 10th following October CPI data and midterm election results. The inflation data we received was, at face value, not all that impressive. But according to central bank expectations, this was a high-impact victory. 

October Inflation (November 10th CPI) Results & Reaction

  • October CPI 0.4% M/M, Exp. 0.6%
  • October CPI 7.7% Y/Y, Exp. 7.9%
  • October CPI Core 0.3% M/M, Exp. 0.5%
  • October CPI Core 6.3% Y/Y, Exp. 6.5%

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As a result, the Nasdaq and the S&P 500 experienced their best day since the March 2020 pandemic rallies. 

But on November 9th — a day before the rally, before the CPI, the market was selling off. The Nasdaq and the S&P 500 fell more than 2%. However, despite the sell off, one institution was making a high-risk bet on two of the most beaten down, economically-sensitive names in mega cap tech: Alphabet and Meta.

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Unusual Options Activity: Meta, Alphabet

Less than an hour apart, someone buys two sets of at-the-money call options in META and Alphabet. The expiration: 2 days away. The total trade price: $3,864,000. That’s a huge amount of money to risk on a two-day outcome. 

Unusual Options Activity

Fortunately, both of these stocks rocketed higher — META by 10.25%, and GOOGL by 7.58%.

Source: Google

As a result, these options multiplied in value. Those GOOGL options finished the day at a mid price of $5.95. Those META options closed at a mid price of $9.90. Altogether, that initial trade value, worth $3,864,000, is now worth a total value of $13,727,500 — more than 3X the prior day’s value.

The Bottom Line

When we hear fund managers get on TV and say, “Well, you know we think that $XYZ stock is a good investment. With a 3-5 year time horizon, this stock will likely be higher!” We have to fight hard not to aggressively roll our eyes. “Oh, really, this large cap value name might be higher in 5 years? That’s so crazy! Thank you for that valuable insight!” We say to ourselves, sarcastically.

But when financial institutions and hedge funds start putting their money where their mouth is by making timely predictions with options — that’s a different ball game. That is when we start paying close attention. We don’t care what you’re saying, we care what you’re doing. So when we saw these two back-to-back bullish bets in two economically sensitive names less than 24 hours before the release of the CPI — possibly the most crucial economic data we have — we alerted Rebel’s immediately. And judging by the strength of November 10th’s record-setting rally, we bet they’re pretty happy we did.

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