Call Option Volumes Spiked For These 3 Stocks

Key Points

• Call option activity broke out of its norm for these three stocks, and each has a good reason behind traders jumping to them.
• The double-digit upside is one of the common factors between these names, with bullish momentum and catalysts being the solidifying force in them.
• Fundamental and technical factors aligned for investors to decide what these traders saw. 

As the saying goes, always follow the money. This time, investors can follow the proverbial big players through an options activity screener, spotting unusual trends in how markets are betting. Options on stocks offer an exciting way to bet on the direction – and timing – of an underlying stock, which is why last-minute bets on stocks can give way for investors to hop on what could be high-probability setups.

Lately, this screener caught a few stocks experiencing higher-than-usual call option volume. A call option typically means a bet that the underlying stock will go higher in a relatively short period, giving investors a reason to investigate the selected stocks further.

Companies like HP Inc. NYSE: HPQ, Hims & Hers Health Inc. NYSE: HIMS, and even Bloom Energy Co. NYSE: BE each have a specific set of reasons explaining why traders flocked to buy options on a potential rally soon. Far from blindly following the money, here’s the information investors need to be a step ahead of the masses.

It’s an Oil Supercycle, Which is Good for Bloom Energy Co.

Bloom Energy focuses on renewable and green energy, which is one reason traders have been jumping on this stock lately. According to the commitment of traders report, now that oil futures contracts are in contango, oil prices may be higher soon.

Recently retracing from their 6-month high of $90 a barrel, oil prices nearly touched The Goldman Sachs Group Inc.’s target of $100 a barrel for 2024. Driven by a breakout in global manufacturing, seen in the latest PMI index readings, oil demand could bring prices up to Goldman’s prediction sooner rather than later.

Because of this, alternative energy could become a more attractive alternative to more expensive oil, which is where Bloom’s biogas and green hydrogen initiatives come into play. Seeing a breakout in call option buying lately is one sign of this sentiment, but there’s more.

Morgan Stanley analysts think Bloom stock could go as high as $20 a share, directly calling for a 21.2% upside from where it trades today. More than that, the stock’s short interest declined by up to 4% in the past month, allowing bulls to take over and bring Bloom to 88% of its 52-week high.

Hims & Hers: Bringing Health Care and Technology Together

This stock’s key performance indicators (KPIs) are growing like a hiccup, confirmed by the company’s latest quarterly financial results. Revenue rose by 46% over the year, all thanks to a 41% push in total subscribers.

These results helped management feel more confident about their 2024 guidance, which was optimistic, to say the least. But the bullish view doesn’t end there. The stock is now trading at new 52-week highs and could flirt with making new all-time highs if this momentum doesn’t end.

Now that the company has announced access to GLP-1 injections, potentially driving massive cost savings to consumers, analysts have become much more bullish on the stock’s future. Earnings per share (EPS) projections are now set for 83.3% growth in the next 12 months, where investors can get the excitement of a technology stock alongside the stability of a medical stock.

As of May 2024, the Vanguard Group had boosted its stake in Hims & Hers stock by 1%. It may not seem much until investors realize it brought the asset manager’s total investment to $221.4 million. Canaccord Genuity Group analysts followed suit with a $24 price tag for the stock, daring it to rally by 25.6% from where it sits today.

HP’s Upcoming Earnings Drew Traders In

The evidence could point to that, as the stock is set to announce its first quarter 2024 earnings on May 29th. It would be highly suspicious to see traders pile into call option bets right before the earnings announcement, so here are some other evidence pointers for investors to crack this case.

Momentum is a good start on this rodeo, as the stock has reached a new 52-week high, with only its past all-time high coming in the way of resistance. Reaching this ceiling would mean a $41.5 share price for HP.

Analysts at Evercore would agree with this trend, as they had set a $40 price target on HP as early as December 2023; not adjusting their valuations is as good a sign for investors as any.

Now that Nvidia Co. NASDAQ: NVDA jumped to new all-time highs, dragging most other artificial intelligence players along with it, HP could play catch up soon, or at least that’s what these call option buyers think.