There were 981 unusually active options in Wednesday trading. Of those, 597 were calls, and 384 were puts. 

Generally, I like to see over 1,000 unusually active options in a single day. It’s a sign of above-average options volume. Not surprisingly, yesterday’s options volume was 45.05 million, 88% of the average daily option volume. 

No matter. 

The unusual options activity, as always, provided plenty of potential trading opportunities. One particular Pfizer put had a 30-day DTE (days to expiration) that caught my attention. 

Out of the 37 unusually active options expiring on Aug. 8, it and two others revealed three standout long straddle plays. 

Pfizer (PFE)

Of the 37 expiring on Aug. 8, the PFE $26 put had the highest Vol/OI ratio at 102.21. Including unusually active options expiring in seven days or more, it had the third-highest Vol/OI (Volume-to-Open-Interest) ratio behind Coinbase and C3.ai.

I last highlighted an unusually active Pfizer option in November 2024. The Jan. 15, 2027, $27 call with a 792-day DTE looked appealing to value investors because it only needed to appreciate by 17% over 26 months to break even or make a profit. 

Yesterday, the Jan. 15/2027 $27 call had four trades of 10, 3, 5, and 10 contracts at prices between $1.81 and $1.99. It’s been a money-loser so far, with its share price down 46 cents over the past 70 days or so—plenty of time to recover. 

Back to the subject at hand. 

Pfizer remains highly profitable, offering an attractive dividend yield. It’s a definite value play that eventually will move higher. The question is when?

The long straddle expects volatility to increase, pushing PFE stock significantly higher or lower. The maximum loss is $1.66 or 6.49% of its $25.56 share price. The maximum profit is unlimited above $27.66 and below $24.34. The profit probability is 40.4%.    

It is a reasonable risk for a potentially above-average reward. 

Nvidia (NVDA)

Nvidia just became the first $4-trillion public company. It really shouldn’t come as a surprise to most investors. CEO Jensen Huang is a brilliant leader who has his company playing in all the right sandboxes. 

Despite being a dominant force in AI, the chipmaker's shares are only up 21% over the past 12 months. Sure, from its April 52-week low of $86.62, its shares have nearly doubled, but investors have grown accustomed to triple-digit annual returns. Hence, its valuation is at 40 times its forward earnings per share. 

In May 2024, I debated which of Nvidia’s and Tesla’s Dec. 18/2026 call options was the better bet for an early Christmas present. Although Nvidia’s call cost four times more than Tesla’s, I concluded that it was the better bet for long-term gains. 

Fast forward to today. 

Accounting for the June 2024 10-for-1 stock split, yesterday’s trades for the $110 call ($1,100 pre-split) ranged from $67.45 to $68.60, more than double the ask price 13 months earlier. Tesla’s $230 call is up about 64% over the same period. 

I don’t think there’s any question Nvidia is still the better bet. But I digress.   

Nvidia had seven unusually active options yesterday. Based on the current share price, the $162.50 put makes the most sense for the long straddle. 

Here is the long straddle.

The profit probability is 41.90%, slightly higher than Pfizer’s. Again, with a maximum loss of $13.30, less than 10% of Nvidia’s share price, the bet’s risk is reasonable, with above-average reward. 

SoFi Technologies (SOFI)

Conveniently, I just wrote about SoFi Technologies yesterday. It had two unusually active options. I’ll go with the $20 call because it’s right at the money. 

As I mentioned yesterday, I like SOFI stock a great deal. I have for a long time. I tend to favor disruptor stocks, but only if they can generate sustainable profits over time. SoFi appears to be on its way. I concluded that it should be a $40 stock in due time. 

 

The $20 long straddle’s profit probability is 41.6%, sandwiched between Pfizer and Nvidia. For some, the $3.28 maximum loss from the net debit (16.22% of its share price), is a dealbreaker. The percentage outlay is too high. I get it. 

However, the big money with long straddles comes with a big move in either direction, and in that regard, SoFi has the best chance to do so.

Of the three long straddles, the $20 bet has the highest IV/HV ratio at 1.60, which is defined as the Implied Volatility (IV) divided by the 30-day realized historical volatility (HV). This means it is currently more volatile than it has been in the past 30 days. In this bet, volatility is your friend. 

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.