Are Option Traders Buying Beyond Meat As It Approaches Key Support?

Down over 60% from its $160 peak in June this year, Beyond Meat Inc BYND has had a hard time catching a bid, closing bearish 18 of the last 23 weeks. However, the stock is approaching a key support zone between $58 and $60, which was where the stock found support back in late March 2020 and ramped from $57 to $195 over the next seven months.

What Happened: Looking at the option flows Tuesday, there are just over 29,000 calls and more than 15,000 puts which means two out of every three options today were calls (image below).

Prior to Tuesday's option trades, Beyond Meat had approximately 253,000 calls and 351,000 puts, so a put heavy market (bearish), which would explain why the stock has been unable to find a bid.

Why It Matters: For the majority of stocks, the option flows tend to be call heavy (bullish bias), but that is not the case for Beyond Meat as 59% of the overall option positioning is bearish. Anytime the overall flows are solidly bearish, without a new positive catalyst it becomes hard for a stock to move higher under the consistent bearish flows.

But now that the market is approaching the key support zone between $58 and $60, traders are starting to snap up more calls with the short-dated volume and a Dec. 17 expiry coming in strong around the $67 and $68 strikes. These short-term flows may hold the prices around these levels until the Dec. 17 expiry.

What's Next: Looking out to the Jan. 21 expiry for next year, there is decent volume for the $70 and $75 strikes with solid open interest between the $70 and $90 strikes (image below).

This suggests option traders are looking for a bullish move to end this year and start the next with prices moving up towards $70 and a moonshot price of $90 for early next year. It should be noted the option market is currently pricing a $75 close by the January monthly op-ex at only 28.75% for the moment. 

But as the market approaches the $60 support zone, options dealers will likely start unwinding their short hedges which could provide supportive flows down there. There may be some decent buying opportunities on dips for traders wanting to get long in that lower support zone as options traders are positioning for a close next month around the $70 strike.

Should the support zone between $58 and $60 fail, the next major support level does not come in until around $50.

Photo: Courtesy Beyond Meat