Unusual Option Activity Report

It has been a nice week so far for companies involved in 3-D printing. SmileDirectClub Inc and 3D Systems Corporation both saw unusual option activity on Wednesday as their share price surged 7.28% and 18.44%, respectively.

3-D Printing Option Activity

SmileDirectClub Inc (Nasdaq: SDC)

SmileDirectClub isn’t exactly a pure play on 3-D printing. However, they were a company that stepped up to manufacture PPE during the height of the pandemic. The company engages in virtual dentistry and uses the technology to produce teeth aligners.

On Wednesday, the call option volume was about 35% higher than average. The put option volume was about 40% higher than average. Overall, there was a put-to-call ratio of 0.18, which shows significantly more calls traded than puts.

Just after the open, the 9 OCT 20 $1350 strike price had over 5,700 contracts traded. It was mostly buying activity with trades getting filled between $0.05 and $0.25.

Bullish interest spilled over into the stock as the share price rallied to as high as $13.42 before closing at $12.53. Wednesday’s move confirmed a breakout from a symmetrical triangle and occurred on above-average volume. The $2.50 measured move gives a short-term target of $14.50.

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3D Systems Corporation (NYSE: DDD)

While SDC may not be a pure play on 3-D printing, 3D Systems is. The stock has been exploding higher following an analyst upgrade and increased outlook. For fiscal year 2021, the company is projected to turn a profit. With 5% projected revenue growth in 2021, the company is more of a value opportunity than anything. However, the potential movement in the coming weeks to months could be significant.

On Wednesday, the call and put option activity was nearly four times the average. Nearly 40% of the call option volume was filled at the ask and 34% filled between then market. The put option volume was mostly filled between the market. The put-to-call ratio finished at 0.138.

The call activity centered on the 9 OCT 20 $6.50 contract with 8,550 contract volume. For that strike, the calls were mostly bought between $0.15 to $0.55.

SDC’s breakout is significant and has potential to reach $7.40 in the near-term near the 61.8% Fib level. A close above that price would indicate a full retracement back to $9. However, regaining it 2019 footing could have the price testing its 2020 high near $12.50, which would have the price nearly doubling.

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Conclusion

I’ve been waiting for movement in these names for quite some time and have owned some SDC since August 5. If the COVID pandemic showed one thing, it was the power of operating virtually and being able to shift production on the fly. That potential paradigm shift may create huge opportunity for these companies in the future.