Thank God it’s Friday.
Maybe it’s just me but this past work week seemed unusually drawn out. Of course, it doesn’t help that we’re in the dog days of summer, entering the four busiest vacation weeks between June and September. Nobody wants to be working right now but I digress.
Speaking of unusual, Friday I tend to write about unusual options activity. Today, I’m zoned in on the nine call options from Thursday’s trading with DTEs of more than 365 days.
These are opportunities for anyone with time to kill and looking for long-duration call options. Of the nine (see below), here are the three I’d bet on.
Palantir
Except for Nvidia (NVDA), Palantir (PLTR) might be one of the biggest AI darlings at the moment.
Oracle (ORCL) announced a collaboration Tuesday with Palantir that certifies its Foundry Platform and Artificial Intelligence Platform on the OCI (Oracle Cloud Infrastructure) distributed cloud infrastructure.
“The collaboration aims to meet the growing demands for regulatory compliance, performance, and security in AI deployments. With this move, customers are expected to effectively scale their AI operations while adhering to sovereignty and security requirements,” stated Oracle’s press release.
Oracle needed some good news after Elon Musk’s xAI dropped its estimated $10 billion Oracle cloud expansion to support its supercomputer used to train xAI’s Grok 2 AI chatbot.
For Palantir, it means it gains access to a significant customer base that it can tap for new business on these two platforms.
I remain bullish about Palantir’s future with or without Oracle. Collaboration is icing on the cake. The company continues to generate greater revenue from its top 20 clients -- something like $55 million per customer, or $1.1 billion -- the Oracle collaboration should help bump that figure higher in 2024 and beyond.
As for the Dec. 18/2026 $32 call, it has 890 days to expiration, nearly 2.5 years from now. The $9.75 ask price is a down payment of 30.5% is high, but your opportunity to make money selling the option provides a good early exit strategy. With a delta of 0.65812, you can double your money if it appreciates by $14.81 (54%) by December 2026.
I’d say the odds are good that it’s trading above $41.75 by Christmas 2026.
Nu Holdings
Nu Holdings (NU) is the parent company of Nubank, one of the world’s largest digital banks, with more than 100 million customers in Brazil, Mexico, and Colombia. By customers, it is the fourth-largest in Latin America.
In addition to providing digital banking, it also offers credit cards, personal loans, investments, and life insurance. Honestly, I wish we had something like this in Canada.
Berkshire Hathaway (BRK.B) owns 2.2% of the company. Its $1.4 billion stake in the company accounts for just 0.3% of Berkshire’s $410 billion equity portfolio. If it’s good enough for Warren Buffett, it shouldn’t be a problem for most buy-and-hold investors.
Sure, operating in Latin America presents some risks not found in the U.S., but the growth of digital banking down there remains significant. It’s a gamechanger for millions of average people.
And here’s the best part: it made $379 million in Q1 2024 from $2.7 billion in revenue.
NU stock had four unusually active call options expiring on Jan. 16/2026, 554 days from now, with strike prices ranging from $12 to $20. The $17 call had a Vol/OI ratio of 95.36 with a whopping volume of 25,176. Nu’s 30-day average options volume is 54,771, so that one call accounted for nearly 50% of its volume Thursday.
Of the four, the $20 strike had the lowest closing ask price of $1.15, a downpayment of 5.8%. The highest was the $12 in-the-money call at $4.10, or a 34% down payment. In terms of the net price paid, the $12 call is the lowest, followed by the $15, $17, and $20.
Assuming the share price appreciates by 15% in the next 12 months and another 7.5% in the six months after that, the share price at expiration would be $16.38, making the $12 call the only one worth exercising your right to buy.
For this reason, I like the $12 call the best in this situation.
Nike
Poor old Nike (NKE). It can’t seem to find its footing. Its shares are down nearly 31% in 2024 and 15% over the past five years, suggesting it might be time for CEO John Donahoe to step aside for someone younger who can breathe some life into the company.
Donahoe is 63, he joined the board in 2014, becoming CEO in January 2020. The average age of the 14-person board is nearly 61. The election cycle currently underway in the U.S. should be a reminder to all investors that old doesn’t necessarily equate to good when it comes to boards and management. Also, I would say 14 people is about two, too many board members.
On June 28, it reported Q4 2024 results. Sales are falling, losing market share, and in 2025 it expects sales to decline mid-single digits compared to the analyst call for a 1% gain.
“Nike’s been under pressure for a couple of years now. I certainly think they have an opportunity now that the valuation’s been reset extremely low to start getting some sponsorship, but it’s just not going to happen today or this week,” AlJazeera reported comments from Art Hogan, chief market strategist at B Riley Wealth.
Although Nike’s in the middle of a $2 billion cost-cutting plan, it isn’t costs that are hurting its share price, it’s forgetting to “Just Do It.”
I have confidence that it can get its business back on the rails over the next 18 months.
For this reason, the Jan. 16/2026 $140 call looks appealing. The ask price is just a down payment of 0.7%. Based on a delta of 0.07736, it needs to appreciate by $12.41 (17%) for you to double your money by selling before expiration. The last time Nike stock traded at $85.80 (yesterday’s closing price of $73.39 plus $12.41) before its 2024 collapse was September 2022. Before that it was May 2020.
I think its shares could jump by 17% in one day with the right CEO hire to replace Donahoe. The risk/reward on this call seems stacked in your favor.
On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
