Options Action in This Ticker was Skewed Heavily on the Bearish Side Today

There was an unusual amount of activity on the options chain for The Chemours company. Most of the activity was on the put side. You can see this in the heavily skewed put to call ratio in the picture directly below. A lopsided put/call ratio like this doesn't show the full picture. We need to find out if the puts were bought or sold to know if the activity was bullish or bearish.

As you can see in the options chain data directly above, most of the activity was at the 25 dollar strike price with a June 21st expiration date. Over 1000 put contracts were opened today. But were they opened to buy or sell?

The time and sales data for the June 21st, 25$ contracts shows that every single put contract was bought. From the standpoint of an options trader, this is a very bearish look.

An interesting sidenote about the order flow for these 1000 contracts is that they were bought in very small blocks. If this was one individual buying most of these contracts, then this small block buying could be an attempt to somewhat conceal the purchases from market makers or competition. Small purchases like this have less probability of showing up on unusual activity screeners in real time.

300 out of the 307 calls that were bought today were purchases at the June 7th, 25$ strike price. But I think this was part of a credit spread as 300 put contracts were bought in bulk at the 25 strike. At the same time, a block sale of 300 contracts were sold at the 26 strike price.

This could possibly be some upside protection to put a cap on the max loss of the thousand put contracts that were bought at the June 21 expiry, as explained earlier. All of this is assuming that the majority of the contracts were purchases by the same individual.

The remaining options activity majorly took place July 19th, 23$ strike price. The activity was neutral as roughly the same amount of contracts were bought and sold.

It should be noted that the options chain has plenty of open interest on the put side going out all the way into next Janurary.

At a quick glance into the long-term technical picture, it appears that today's bearish options activity may be warranted.

The massive rally that followed the covid pandemic was not able to breach all-time highs. It even appears that the price action is beginning to roll over near these historically high prices.

You can see the long-term picture below with weekly candles, and there is a clear downward vector that the price action has been traveling in for well over a year.

It is interesting to see that the bearish options activity took place near the resistance level of the downward price channel highlighted in the chart below.

The short-term picture is clearly bearish as the chart continues to print lower highs and lower lows. Major indicators are becoming more bearish as RSI is in bearish territory and MACD is about to cross below its histogram.

Financials for this company look strong. The company takes in a ton of revenue every quarter. The company consistently pays out a meager dividend yield. I could see this company as a good addition to a value oriented portfolio. But from a growth standpoint, thing look stagnant. It should also be noted that the balance sheet doesn't look the best for this company. From a financial standpoint, without improvements in earnings, I can understand why investors have not necessarily been bidding up the price to new all-time highs over the past few years.

The bearish options activity sparked my attention towards this ticker. After a quick glance at the technicals and the financials, I think it makes sense that this bearish options activity took place near a long-term trending resistance level. I am even considering a short position myself.

As always, I am not a financial professional, and this is not investment advice. Be careful and be patient. Dont anticipate the market. Rather, participate in the market. Don't invest money that you can't afford to lose. Give some of your investments time and know when to cut your losses.

Don't be greedy. Don't invest in anything you don't understand. Don't put all of your eggs in one basket. Don't listen to the hype. Don't fomo or panic into or out of trades. Do your own due diligence. And just follow the trends. A trend is your friend. Good luck trading.