Dropbox is now some 40% higher than its December lows. The stock is not alone in its price recovery as many names have seen a strong return since the Christmas eve lows. Is there more upside coming? Or was this just a relief rally?
A great read on Dropbox ($DBX) if you have the time sums it up better than I can.
I think the stock is ready to break back over $30 a share. Strong resistance lies ahead at $27, a break of which sets up that $30 figure and beyond.
However what has really piqued my interest is the continued buying of January 2020 $60 calls.
$DBX some intriguing call action yesterday - I picked up calls this morning to piggyback - yesterday trader opened 15k Jan 2020 $60 calls at $.20 - now top open interest by far in the $23.70 stock
— UPBOptionMil (@UPBOptionMil) February 1, 2019
and this past Friday the action continued.
$DBX more call action today - July a brand spanking new opening call sweep on the ask --->> DBX Jul 30.0 Calls 451 contracts at $1.45 and more Jan $60 calls on the ask -->> >$DBX Jan20 60.0 Calls 2500 contracts at $0.30
— UPBOptionMil (@UPBOptionMil) February 8, 2019
Option sentiment was terribly bullish on Friday, as was the overall price action. A wall at $25.15 fell on heavy buying volume, sending the stock to a near high of the day close.
A positive earnings report on 2/21/19 could move the stock back over $30.00 a share. Which is still some 50% less than the price those $500k+ worth of calls are betting on for the start of 2020. I piggybacked a on those $60.00 calls, but instead of going far out of the money, I cut the time and price down.
These calls are almost a double after Fridays action. They will also capture the upcoming earnings report. At that time I may look to move up the ladder for some summer calls.
I do recall when $TWTR was trading in the lows teens in 2017 some very unusual call action betting on a possible 100%+ move:
I commented then in the optionmillionaires.com chat room -->>
and I think that is where we are with $DBX. Some very unusual call action that is over 100% out of the money, with a lot of time until expiration. Just like the Twitter trade, we very well may be looking back months from now in awe of just how prescient those $60 leaps were....
which brings me back to twitter. On Friday the Jan $70 calls saw heavy action with a giant block bought on the ask --->>
yes and its the top open interest with over 110k contracts open, yesterday the biggest trade bought on the ask --->> Jan 2020 $70.0 Calls 50,000 contracts at $0.40 the next biggest trade - another block 20 minutes later - Jan 2020 $70 Calls 5000 contracts at $0.39
— UPBOptionMil (@UPBOptionMil) February 9, 2019
again with almost a year of time on them and over 100% out of the money. We need to see if Fridays action was new or perhaps closing (stay tuned on Monday morning for the details) The original large $70 2020 opening call trade took place toward the end of last year.
$TWTR sees 60,000 contracts for JAN 2020 $70.00 calls bought the last few minutes at $.55 on the ask
— UPBOptionMil (@UPBOptionMil) November 29, 2018
The Twitter trade could be setting up again for some upside into the summer. Deja Vu all over again?
I'll be watching closely.
$DBX at $60 sounds about as crazy as a NY Mets World Series this year. Twitter at $70? Equally as odd however stranger things have happened. And in both cases the size of the trades give both some credence.
Have a great weekend see you on Monday!