The Blubber

Monday, October 18

10:30am ET:

We at Unusual Whales have discussed the importance of Social Media tracking in the past. Platforms such as Reddit and Twitter are among the best places to see the sentiment of a given stock; especially if the stock has been discussed en masse.

Over the weekend, FuelCell Energy Inc. (NASDAQ:FCEL) experienced a spike in its social media presence, namely on Twitter. FCEL worked its way from 4th on the Social Tracker list on Saturday to the number 1 most talked about ticker on Twitter this morning. As we’ve seen with a number of tickers in the past (such as UPST and OPAD, which we wrote about in a previous article), FuelCell Inc. made morning moves following the weekend of chatter, from Friday's close price of $7.39 to a morning high of $8.67.

Prior to the marketless weekend, FCEL experienced unusual options activity. When we looked at the options volume for FCEL over the last two weeks, it’s apparent that FCEL was garnering interest from options traders. From Tuesday October 5th to Tuesday, October 12th, total daily Call Volume for FCEL ranged from a low of 22,659 on the 6th to a high of 50,920 on the 11th. From there, it dropped back down to 39,261 on Tuesday. It is there that the unusual flow began.

From that total volume of 39,261 on Tuesday the 12th, the volume more than doubled on Wednesday (October 13th), drawing a total trade volume of 87,744 on call options. On Thursday (October 14th) and Friday (October 15th), we saw a continued increase in this volume, reaching a high of 225,698 on Friday. This morning by comparison, just one hour into trading, the total call volume traded is already nearing a total volume of 200,000.

Moving on to the Flow tool, we can see that this call volume was predominantly bullish going into the weekend.

Pictured above is an image from the Unusual Whales flow tool from Friday, with filters set to $10k+ in premium spent, ask-side orders. Prior to the weekend’s chatter, options traders focused on the slightly in the money $7 call strike, with expiries ranging from October 22nd for a short term sentiment, all the way to January 19, 2024, reflecting long-term bullish sentiment. Not pictured are the contracts that expired on Friday, October 15th (which also held focus on the $7 strike). The tool did not flag many of these trades as multi-leg or spreads, which could further indicate the urgency of call buyers.

With the filters set to the same settings for today, we see the same bullish sentiment as we did going into the weekend, but more pronounced. Traders place heavy focus on in the money strikes once again, especially the multi-leg trade at the top of the image; four orders above $10k in premium came in at exactly the same time, all calls bought to open, on the $5.5 call strike expiring in January of 2023.

This is a long term, bullish strategy, as the buyer of these options could hold these calls (which by now are well in the money) until expiry. If FCEL maintains upward movement during that time, the holder of these options could profit handsomely, either by exercising those options to obtain shares significantly lower than the current share price, or by selling the contracts outright to pocket the gains realized during that time.

Time and time again, stock movement such as this shows us the importance of  Social Media tracking. Whether it’s on Twitter (as was the case for UPST and OPAD) or Reddit (as we discussed in another article about fresh foods giant, DOLE), Social Media is an important indicator of retail trader sentiment. Stay tuned for more, as the popular tickers are ever changing, and being on top of ticker popularity could potentially give us an edge in our own trading.