Hey Traders,
With the market drawdown we’ve seen thus far in 2022, megacaps (or in some cases, former mega caps) have been some of the hardest hit as tech and growth stocks see their share prices plummet in this “risk off” environment.
And there’s a lot of investors (and at this point, a LOT of bag holders …) wondering if these former market staples will make a recovery …
And when.
And while there’s still Big Money bulls out there …
They seem to be tempering their expectations for a few large caps’ return to glory …
As evidenced by these multi-million dollar trades.
First, let’s take a look at a social media stock that has been the subject of its fair share of controversy, rumors, and media attention …
Twitter Inc. (Ticker: TWTR).
Like plenty of other tech stocks, TWTR boomed during the pandemic and post-pandemic rally, as investors poured money into markets.
However, so far in 2022, it seems to be giving back quite a bit of that upside.
TWTR briefly received a boost from the much-publicized Elon Musk buyout offer, which remains in limbo, and the shares appear to be cooling considerably.
While they were propelled as high as $54.75 following the buyout talk, as of Thursday, TWTR was trading at just $38.98.
However, Big Money seems to think there may be upside to come … perhaps the Elon deal will come to fruition after all?
On Friday, ahead of the holiday weekend, this trader opened a January 2023 45/50/55-strike call butterfly, paying $0.22 for 30,000 55-strike calls and $3.05 for 30,000 45-strike calls (a total cost of $9,810,000), while selling 60,000 50-strike calls for $1.00 (bringing in $6,000,000).
It seems this trader thinks TWTR could be headed back near its buyout-frenzy highs before the first expiration of 2023.
But … even its buyout-rumor-fuelled high is still well-off where the shares were trading during much of 2021.
Has this large cap seen its peak?
This Big Money move seems to think so … at least for the time being.
And that isn’t the only large cap that seems to be losing some Big Money enthusiasm.
Just take a look at former mega cap Meta Platforms (Ticker: META).
Following a disastrous post-earnings drop that saw META shed nearly one-third of its value in just a few short weeks, the shares have only continued to wind lower.
The social media/metaverse innovator has plunged from late-2021 highs over $350 to a June low of $154.25.
Currently, the shares are trading around $172.27 … up from their Jubne lows, but still well-off 2021 trading highs.
This Big Money bettor is still bullish … but they seem to be tempering their expectations of how high META will fly …
They rolled their block of 20,000 August 215-strike calls (selling for $1.55) out to the November expiration, where they purchased 20,000 200-strike calls for $9.10.
This roll out cost the trader $15,100,000 … definitely a statement-making trade.
Yes, Big Money seems to still see some upside for the social media/metaverse name …
But their enthusiasm seems to be waning.
Personally, I am not surprised that Smart Money seems to be losing some steam on their large cap gambles.
And frankly, I think some of the biggest names in the market are facing some stiff headwinds.
In fact, Andrew Giovinazzi and I went live to reveal five top stocks to NOT buy right now …
Some of the names might seem surprising … but I firmly believe these market giants are flashing “STAY AWAY.”
Your Only Option,
Mark Sebastian