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 $8,830,000 That Palantir Technologies Inc. (NYSE: PLTR) Will Have a Significant Move in Either Direction in 2 Weeks.
On Wednesday, February 17, 2021, a “smart money” trader seems to have bought 10,000 of the 05-Mar-21 $35.00 call options on PLTR for $1.22 per share. Her outlay was $1,220,000 for these options. In what appears to be a Long Straddle Strategy (wherein the investor simultaneously purchases a call option and a put option on the same underlying asset with the same expiration date and strike price), she also seems to have bought 10,000 of the 05-Mar-21 $35.00 put options on PLTR for $7.61 per share, which is an outlay of $7,610,000. Her total outlay for this Long Straddle Strategy was $8,830,000.
PLTR – Long Straddle Options Strategy
PLTR will need to rise to $43.83 for the call option trade to break even — around a 62% return from the current price of $27.08. And then for every $1 the stock rises above $43.83, our “smart money” trader will make $1,000,000!
PLTR will need to decline to $26.17 for the put option trade to break even — around a 3% return from the current price of $27.08. And then for every $1 the stock decreases below $26.17, our “smart money” trader will make $1,000,000!
She seems to be anticipating the underlying stock to have a significant move in either direction within the next 2 weeks.
Trade #2: Trader Just Bet $549,000 That Quantumscape Corp (NYSE: QS) Will Rise 5% in 4 Weeks
On Wednesday, February 17, 2021, a “smart money” trader seems to have bought 1,000 of the 19-Mar-21 $50.00 call options on QS for $11.54 per share. His outlay was $1,154,000 for these options. In what appears to be a Bull Call Spread Strategy (wherein the investor buys a call option with a lower strike price and sells a call option with a higher strike price but with the same expiry date), he also seems to have sold 1,000 of the 19-Mar-21 $70.00 call options on QS for $5.26 per share, which is an inflow of $526,000. His total outlay for this Bull Call Spread Strategy was $549,000.
QS – Bull Call Spread Options Strategy
QS needed to rise to $56.28 for the call option trade to break even. Then, for every $1 the stock rose above $56.28, our “smart money” trader made $100,000!
He seems to be anticipating the underlying stock to surge until $70.00, which is a nearly 5% return from the current price of $66.52.
Trade #3: Trader Just Bet $6,848,000 That AT&T Inc. (NYSE: T) Will Have a Significant Move in Either Direction in 4 Weeks.
On Wednesday, February 17, 2021, a “smart money” trader seems to have bought 42,800 of the 19-Mar-21 $30.00 call options on T for $0.52 per share. Her outlay was $2,225,600 for these options. In what appears to be a Long Straddle Strategy (wherein the investor simultaneously purchases a call option and a put option on the same underlying asset with the same expiration date and strike price), she also seems to have bought 42,800 of the 19-Mar-21 $30.00 put options on T for $1.08 per share, which is an outlay of $4,622,400. Her total outlay for this Long Straddle Strategy was $6,848,000.
T – Long Straddle Options Strategy
T will need to rise to $31.60 for the call option trade to break even — around a 7% return from the current price of $29.57. And then for every $1 the stock rises above $31.60, our “smart money” trader will make $4,280,000!
T will need to decline to $28.40 for the put option trade to break even — around a 4% return from the current price of $29.57. And then for every $1 the stock decreases below $28.40, our “smart money” trader will make $4,280,000!
She seems to be anticipating the underlying stock to have a significant move in either direction within the next 4 weeks.
Trade #4: Trader Just Bet $596,700 That Tilray Inc. (NASDAQ: TLRY) Will Rise 27% in 4 Weeks
On Tuesday, February 16, 2021, a “smart money” trader seems to have bought 1,989 of the 19-Mar-21 $30.00 call options on TLRY for $10.42 per share. His outlay was $2,072,540 for these options. In what appears to be a Bull Call Spread Strategy (wherein the investor buys a call option with a lower strike price and sells a call option with a higher strike price but with the same expiry date), he also seems to have sold 1,989 of the 19-Mar-21 $40.00 call options on TLRY for $7.42 per share, which is an inflow of $1,475,840. His total outlay for this Bull Call Spread Strategy was $596,700.
TLRY – Bull Call Spread Options Strategy
TLRY needs to rise to $33.00 for the call option trade to break even — around a 5% return from the current price of $31.51. Then, for every $1 the stock rises above $33.00, our “smart money” trader will make $198,900!
He seems to be anticipating the underlying stock to surge until $40.00, which is a nearly 27% return from the current price of $31.51.
Trade #5: Trader Just Bet $14,655,000 That Twitter Inc. (NYSE: TWTR) Will Have a Significant Move in Either Direction in 4 Weeks.
On Tuesday, February 16, 2021, a “smart money” trader seems to have bought 15,000 of the 19-Mar-21 $75.00 call options on TWTR for $4.31 per share. Her outlay was $6,465,000 for these options. In what appears to be a Long Straddle Strategy (wherein the investor simultaneously purchases a call option and a put option on the same underlying asset with the same expiration date and strike price), she also seems to have bought 15,000 of the 19-Mar-21 $75.00 put options on TWTR for $5.46 per share, which is an outlay of $8,190,000. Her total outlay for this Long Straddle Strategy was $14,655,000.
TWTR – Long Straddle Options Strategy
TWTR will need to rise to $84.77 for the call option trade to break even — around an 18% return from the current price of $71.79. And then for every $1 the stock rises above $84.77, our “smart money” trader will make $1,500,000!
TWTR will need to decline to $65.23 for the put option trade to break even — around a 9% return from the current price of $71.79. And then for every $1 the stock decreases below $65.23, our “smart money” trader will make $1,500,000!
She seems to be anticipating the underlying stock to have a significant move in either direction within the next 4 weeks.
Happy Trading!
— Trades of The Day Research Team