By Ainvest in options-flow — 23 Oct 2025

DAR Long-Term Bull Bet - $1.1M Sustainable Ingredients Play!

Whale alert: $2.1M institutional call positioning detected on DAR (YTD: +0.86%). This trade is 477x larger than average, signaling major conviction. Full analysis includes gamma-based support/resistance levels, comprehensive catalyst timeline, three risk-adjusted trading strategies, and precise entr

📅 October 23, 2025 | 🔥 Unusual Activity Detected

🎯 The Quick Take

Someone just dropped $1.1M on Darling Ingredients (DAR) call options expiring January 2026! This bullish bet at the $35 strike is a massive vote of confidence in this sustainable ingredients producer, coming in at 477x the average trade size. With the stock currently at $34.09, smart money is betting on a breakout in the coming months. Translation: Big money sees value in the renewable diesel and protein recycling story!

📊 Company Overview

Darling Ingredients Inc. (DAR) is a global leader in sustainable ingredient production with:
- Market Cap: $4.83 Billion
- Industry: Fats & Oils / Sustainable Ingredients
- Employees: 15,500
- Primary Business: Develops and manufactures sustainable ingredients for pharmaceutical, food, pet food, fuel, and fertilizer industries by converting animal by-products and used cooking oil into commercial products like gelatin, proteins, and fats

This isn't your typical industrial stock - DAR is riding the renewable energy wave by turning waste into valuable products!

📊 The Option Flow Breakdown

The Tape (October 23, 2025):

Time	Symbol	Side	Buy/Sell	Type	Expiration	Premium	Strike	Volume	OI	Size	Spot	Option Price
10:47:38	DAR	MID	BUY	CALL	2026-01-16	$1.1M	$35	4.2K	19K	3,950	$34.09	$2.80
11:50:13	DAR	ASK	BUY	CALL	2026-01-16	$1M	$35	8.2K	19K	3,950	$33.83	$2.65

Total Investment: ~$2.1M across both trades for 7,900 contracts

DAR Option Tape Screenshot

🤓 What This Actually Means

This is a pure bullish call buy - someone's making a serious long-term bet on DAR! The trader:

Bought 7,900 January 2026 $35 calls at different times
Paid $2.1M total premium (average ~$2.72 per contract)
Needs DAR above $37.72 to break even ($35 strike + $2.72 premium)
Has 85 days until expiration to be right
Maximum loss limited to $2.1M premium paid
Unlimited profit potential if DAR rallies

Unusual Score: EXTREME (477x average size) - This happens maybe once a year! The z-score of 42.18 means this is in the 99.98th percentile of all DAR trades in the past month.

📈 Technical Setup / Chart Analysis

YTD Performance Chart

DAR Ytd Chart

Darling Ingredients has had a choppy 2025 with +0.86% YTD performance, but don't let that fool you - the stock has shown resilience despite a brutal 34% max drawdown earlier in the year.

Key observations:
- High volatility: 47.3% implied volatility signals significant uncertainty
- Recovery in progress: Bounced from $27-28 lows to current $34.60 level
- 52-week range: Testing multi-month consolidation around $30-40 range
- Volume patterns: Recent buying interest with October volume spikes

The stock peaked near $40 in late June/early July before pulling back, and now appears to be building a base for the next move.

Gamma-Based Support & Resistance Analysis

DAR Gamma Sr

Current Price: $34.48

The gamma chart reveals critical price magnets that explain this bullish positioning:

🔵 Support Levels (Put Gamma):
- $32.50: Strongest support with 0.99M total gamma - this is a major floor
- $30.00: Secondary support at 0.56M gamma - last line of defense

🟠 Resistance Levels (Call Gamma):
- $35.00: MASSIVE resistance at 4.36M total gamma - this is THE wall to break! (Only 1.4% above current price)
- $37.50: Secondary resistance at 0.46M gamma once $35 breaks
- $40.00: Major target at 1.22M gamma - aligns with prior highs

Net Gamma Bias: BULLISH - Total call gamma of 8.98M vs put gamma of 1.21M shows heavy call positioning

This gamma setup perfectly explains the trade logic - the $35 strike is where all the action is! Breaking this level could trigger a sharp move to $37.50-40.00 as market makers chase the rally.

🎪 Catalysts

Upcoming Events & Key Drivers

Production Tax Credit (PTC) Monetization - Q4 2025 & Beyond[^1][^2]
- DAR has agreed to sell $125 million of its 2025 PTC in Q4 2025
- Additional $125-175 million in PTC sales planned by year-end
- These federal incentive sales are critical sources of value and cash flow
- Proceeds expected to improve debt ratios and enhance balance sheet flexibility[^3]
- Market watching closely as PTC monetization directly impacts cash generation and shareholder value

Regulatory & Policy Developments - 2026 Outlook[^1][^2]
- Management expressing optimism about upcoming public policy shifts in US biofuel mandates
- Potential changes to renewable fuel standards could meaningfully impact margins and sentiment
- California LCFS (Low Carbon Fuel Standard) credit values expected to stabilize or improve in 2026
- Policy developments supporting demand or pricing for renewable diesel could boost financial performance
- Management commentary: "We are on the heels of public policy developments that we expect to play out in our favor"[^2]

Q4 2025 Earnings - Expected Late February/Early March 2026[^4][^5]
- Q3 2025 results reported October 23, 2025 showed solid revenue but lower-than-expected EPS[^1]
- New 2025 core Adjusted EBITDA guidance: $875-900 million (ingredients business only)[^1][^2]
- Company now guides solely for core ingredients business due to fuel segment uncertainty
- Strategic conservatism reflects focus on controllable, steady earnings drivers
- Market watching for continued momentum in core ingredients segment

Product Innovation Pipeline[^6]
- "NexTIDA Brain" product launch planned by summer 2026
- Represents potential new growth driver for the company
- Further details on product specifications and market potential awaited
- Innovation focus demonstrates commitment to expanding beyond traditional business lines

Renewable Diesel Industry Trends
- Government policies supporting renewable fuels expected to firm up in 2026
- RIN (Renewable Identification Number) prices impact profitability
- DAR supplies feedstock to major renewable diesel producers through Diamond Green Diesel JV
- Increasing demand for sustainable aviation fuel (SAF)

Core Ingredients Business Momentum[^1][^2]
- Management commentary: "Our core ingredients business continues to build momentum, driven by strong fundamentals across all segments"
- Animal protein prices showing signs of stabilization
- Pet food ingredient demand remains robust
- China demand dynamics for protein meals improving
- Focus shift to ingredients business provides stability amid fuel segment volatility

Recently Completed

Q3 2025 Earnings Results - October 23, 2025[^1][^4][^5]
- Solid Q3 revenue reported but earnings per share missed expectations
- Previous quarter showed pressure on renewable diesel feedstock margins
- Company managing through industry headwinds with strategic focus
- Results triggered options flow activity as market reassessed valuation

Analyst Outlook Remains Bullish[^7][^8]
- Majority of Wall Street analysts maintain bullish stance on DAR
- Recent 12-month price targets imply 40-50% upside from current levels
- Upside contingent on policy clarity and sustainable improvements in renewable fuel margins
- Institutional conviction supported by strong core ingredients fundamentals

Strategic Acquisitions & Portfolio Management
- DAR has history of bolt-on acquisitions to expand geographic footprint
- Focus on vertical integration in renewable diesel supply chain
- European operations providing geographic diversification
- Balance sheet initiatives position company for flexibility in dynamic macro environment

🎲 Price Targets & Probabilities

Using gamma levels, industry dynamics, and technical setup:

🚀 Bull Case (35% chance)

Target: $40-45

Breaks through massive $35 gamma resistance
Renewable diesel margins stabilize and improve
Q3/Q4 earnings show strong operational execution
RIN prices recover, boosting feedstock demand
Successful acquisition announced

This trade wins big in this scenario - potentially 200-300% returns

😐 Base Case (45% chance)

Target: $35-38 range

Gradually grinds through $35 resistance over time
Mixed earnings with stable but unexciting margins
Sideways consolidation before January expiration
Industry conditions remain neutral

Trade needs stock above $37.72 to profit at expiration

😰 Bear Case (20% chance)

Target: $30-33

Fails to break $35 resistance, rejects lower
Disappointing earnings or margin compression
Renewable diesel headwinds persist
Broader market correction hits industrials
Falls back to $32.50 support zone

Maximum loss of $2.1M premium paid

💡 Trading Ideas

🛡️ Conservative: Reduce Premium Cost with Spread

Play: Buy $35/$40 call spread (January 2026)

Buy $35 calls at $2.65, sell $40 calls at ~$1.00

Risk: $1.65 per contract ($165 per spread)
Reward: $3.35 max profit if above $40 (203% return)

Why this works: Cuts cost in half while capturing the high-probability move to gamma resistance at $40

⚖️ Balanced: Follow the Flow with Smaller Size

Play: Buy January 2026 $35 calls

Entry at $2.50-2.80 range

Risk: Premium paid per contract
Reward: Unlimited if DAR rallies above $38
Breakeven: $37.50-37.80

Why this works: Direct replication of smart money trade with 85 days of time value

🚀 Aggressive: Shorter-Term Gamma Breakout

Play: Buy December 2025 $35 calls on DAR

Cheaper premium, closer expiration

Risk: Less time for thesis to play out
Reward: Higher gamma leverage if quick move happens
Target: $37-40 within 60 days

Why this works: Capitalizes on $35 gamma wall break with less capital at risk

⚠️ Risk Factors

Industry headwinds: Renewable diesel margins remain under pressure from feedstock costs and RIN volatility
Commodity exposure: Animal protein and fat prices are cyclical and unpredictable
Policy risk: Government renewable fuel policies could change, impacting demand
Time decay: January 2026 expiration means theta decay accelerates after holidays
Earnings timing: Q3 results in November could bring volatility before position matures
$35 gamma wall: Massive resistance at $35 strike could cap upside in near-term
China demand: Any slowdown in Chinese protein demand could pressure pricing

🏁 The Bottom Line

Real talk: This $2.1M bet on Darling Ingredients is a major vote of confidence in the sustainable ingredients story. With 477x average trade size, this isn't retail speculation - it's institutional conviction.

The thesis is clear: Someone believes DAR breaks through the massive $35 gamma resistance and heads to $40+ over the next 85 days. The renewable diesel and protein recycling sectors have faced headwinds, but smart money appears to see light at the end of the tunnel.

If you own DAR: This validates your position - consider riding the wave but watch that $32.50 support

If you're watching: The $35 level is THE make-or-break zone. A clean break above with volume could spark a sharp rally to $40 given the gamma dynamics

If you're bearish: You're betting against a $2.1M institutional position - that takes conviction. The $35 resistance has been strong, but trends can change quickly

Mark your calendar:
- Early November for Q3 earnings
- Mid-December for holiday positioning
- January 16, 2026 expiration date

This trade is betting on sustainable ingredients becoming more profitable over the next few months. In a world focused on ESG and renewable energy, DAR's business model of turning waste into valuable products positions them well. The question is whether margins can recover fast enough to justify a breakout above $35!

Disclaimer: Options trading involves substantial risk of loss. This analysis is for educational purposes only and not financial advice. The unusual score calculation is based on historical data and does not guarantee future performance. Always conduct your own due diligence and consider your risk tolerance before trading.

About Darling Ingredients: Darling Ingredients Inc. is a global leader in sustainable ingredients, developing and manufacturing products for pharmaceutical, food, pet food, fuel, and fertilizer industries by converting animal by-products and used cooking oil into valuable commercial ingredients. With a $4.83 billion market cap, DAR operates at the intersection of sustainability and industrial processing in the fats & oils sector.