The Blubber

Unusual Options Activity in BBBY before their deal on Friday.

Today, April 25, 2022, among the underlying components of the NYSE, we saw unusual or noteworthy options trading volume and activity in BBBY right before close and news of their buybuy baby potential buyout:

Literally moments before news, huge $16/17 calls with 0 (!!!) days to expire came in with heavy volume.

• In 2nd image can see exact moment trader frontloaded the news. Who knew?
  

You can see for eachposition, the volume was greater than open interest (thus the exclamation mark)

Additionally, these orders were seen in the new Unusual Whales Hottest Chains tool as well as flow dashboard momentarily, followed by heavy bullish Friday flow.

Take a look at this breakdown:

1. $BBBY overall options activity: note the early morning call activity followed by call activity right before the news at 12:30 PST.

1. 23c 4/29 popped by a single trader ~ @ .13 (high of .85) closed at .48
   

Also note the volume on the 17c 0dte was already 2.6k to 963 OI at 1002 AM. High of 1.56, closed worth .33

3)

Closer examination of the 23c 4/29

All grabbed within the span of 9 seconds at 1003 EST

Give them credit for  ~1000 contracts @ .13, $13k

As mentioned, these orders were marked as a “sweep”.  An options sweep (or sweep-to-fill) occurs when a broker splits an order into many parts in order to get the best possible pricings currently offered on the market.

These orders can often be filled across multiple exchanges and the broker will continue to fill the order lot by lot, always for the best possible price, until the order is completely filled.

Sweeps might stand out because they imply some entity (or entities) wanted to enter specific options contracts regardless of their price, as they were focused only on having their entire bulk order filled as quickly as possible.  While the magnitude of sweeps might stand out, each one must be investigated thoroughly to understand what the sentiment of a trader is as compared to the overall flow.

4)

At 342 someone puts together a multileg trade of 500x 18 and 23 calls

Assuming it's the same trader, could be a roll down

If so the 500 23c were sold for $27k and the 500 18c bought for $79k

They may now be long 500x 18c ($60.5k value) and 500x 23c ($24k value)

5)

buy 1000x 23c @ .13 = -13k

sell 500x 23c @ .54 = +27k

buy 500x 18c @ 1.58 = -79k

net of all transactions = -65k

current position + equity:

500x 18c @ 1.21 = 60.5k

500x 23c @ .48 = 24k

current equity = 84.5k

6) All this assumes that the original trader closed 500x 23c and put the money towards 500x 18c. This could also easily be a different trader going long 500x 18/23 call debit spreads at the total of of 1.04 a contract (1.58 - .54). Either way, someone always knows.

To view more information about BBBY’s daily flow breakdown, click here to visit unusualwhales.com.