What if you could mimic the moves of some of the best-informed traders on the planet? That’s the idea behind a new series we’re launching that’s focused on what we’ll call “smart money” option trades.
In short, we’re using Market Chameleon to scan the options market for unusual activity and identifying some of the most interesting mega trades – relatively large volume options trades we can potentially mimic… but on a smaller scale!
While we can’t be 100% certain of the exact options strategies our “smart money” traders are employing on these trades, these are our best guesses based on the information we do have.
That said, here are 5 of the most interesting “smart money” trades we came across in the past week.
Trade #1: Trader Just Bet $6,240,000 that Biogen Inc. (NASDAQ: BIIB) Will Rise ~13% in 10 Weeks.
On Wednesday, November 4, 2020, a “smart money” trader seems to have bought 1,500 of the 15-Jan-21 $300 call options on BIIB for $56.20 per share. His outlay was $8,430,000 for these options. In what appears to be a bull spread strategy, he also seems to have sold 1,500 of the 15-Jan-21 $400 call options on BIIB for $14.60 per share, which is an inflow of $2,190,000. His total outlay for this bull spread strategy was $6,240,000.
BIIB Options Trades
For every $1 the stock rises above $341.60, our “smart money” trader will make $150,000! He seems to be anticipating the underlying stock to surge until $400, which is a nearly 13% return from the current price of $355.63.
Trade #2: Trader Just Bet $425,375 That Comcast Corporation (NASDAQ: CMCSA) Will Rise ~15% in 10 Weeks.
On Wednesday, November 4, 2020, a “smart money” trader seems to have bought 17,015 of the 15-Jan-21 $50 call options on CMCSA for $0.25 per share. Her outlay was $425,375.
CMCSA Options Trades
CMCSA will need to rise to $50.25 for the call option trade to break even — a 15% return from the current price of $43.70. And then our “smart money” trader will make $1,701,500 for every $1 the stock rises above $50.25!
She also appears to have sold 50,000 of the 15-Jan-21 $40 put options on CMCSA for $1.08 per share. (Note: We have made this assumption based on the analysis of the charts, which shows that there is a strong support area for the stock near the $40-$42 levels.) Her inflow was $5,400,000 for these options, so her total inflow for the entire trade was $4,974,625.
Trade #3: Trader Just Bet $883,346 That LYFT Inc. (NASDAQ: LYFT) Will Rise 29% in 6 Weeks
On Wednesday, November 4, 2020, a “smart money” trader seems to have bought 2,868 of the 18-Dec-20 $27.50 call options on LYFT for $3.56 per share. His outlay was $1,021,010 for these options. In what appears to be a bull spread strategy, he also seems to have sold 2,868 of the 18-Dec-20 $37.50 call options on LYFT for $0.48 per share, which is an inflow of $137,664. His total outlay for this bull spread strategy was $883,346.
LYFT Options Trades
LYFT will need to rise to $30.58 for the call option trade to break even — around a 5% return from the current price of $29.19. And then for every $1 the stock rises above $30.58, our “smart money” trader will make $286,800!
He seems to be anticipating the underlying stock to surge until $37.50, which is nearly a 29% return from current prices.
Trade #4: Trader Just Bet $1,135,680 That AbbVie Inc. (NYSE: ABBV) Will Rise 6% in 6 Weeks
On Wednesday, November 4, 2020, a “smart money” trader seems to have bought 3,627 of the 15-Jan-21 $92.50 call options on ABBV for $6.20 per share. Her outlay was $2,248,740 for these options. In what appears to be a bull spread strategy, she also seems to have sold 4,281 of the 15-Jan-21 $100 call options on ABBV for $2.60 per share, which is an inflow of $1,113,060. Her total outlay for this bull spread strategy was $1,135,680.
ABBV Options Trades
ABBV will need to rise to $98.70 for the call option trade to break even — around a 4% return from the current price of $94.50. And then for every $1 the stock rises above $98.70, our “smart money” trader will make $362,700!
She seems to be anticipating the underlying stock to surge until $100, which is a nearly 6% return from the current prices. (Note: The analysis of the charts of ABBV shows that there is a strong resistance area for the stock near $100.)
Trade #5 Trader Just Bet $1,109,750 That iShares 20+ Year Treasury Bond ETF (NASDAQ: TLT) Will Fall 8% in 2 Weeks
On Wednesday, November 4, 2020, a “smart money” trader seems to have bought 39,500 of the 20-Nov-20 $156 put options on TLT for $0.37 per share. His outlay was $1,461,500 for these options. In what appears to be a bear spread strategy, he also seems to have sold 35,175 of the 20-Nov-20 $149 put options on TLT for $0.10 per share, which is an inflow of $351,750. His total outlay for this bear spread strategy was $1,109,750.
TLT Options Trades
TLT will need to decline to $155.63 for the put option trade to break even — around a 3% decline from the current price of $161.08. And then for every $1 the stock falls below $155.63, our “smart money” trader will make $3,950,000!
The trader seems to be anticipating the underlying stock to decline until $149, which is nearly 8% downside from the current prices.
Happy Trading!
— Trades of The Day Research Team
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