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 Made $2,070,060 Betting That Las Vegas Sands Corp. (NYSE: LVS) Will Stay Bearish For The Next 8 Weeks.
On Wednesday, April 21, 2021, a “smart money” trader seems to have bought 15,221 of the 18-Jun-21 $72.50 call options on LVS for $0.50 per share. His outlay was $761,050 for these options. In what appears to be a Bear call spread Strategy (wherein the investor buys a call option with a higher strike price and sells a call option with a lower strike price, but with the same expiry date), he also seems to have sold 15,221 of the 18-Jun-21 $65.00 call options on LVS for $1.86 per share, which is an inflow of $2,831,110. His total inflow for this Bear Call Spread Strategy was $2,070,060.
LVS – Bear Call Spread Options Strategy
A Bear Call Spread strategy is typically used to generate premium income based on a trader’s bearish view of a stock or index. He seems to be anticipating that the price of the underlying stock would not cross above $65.00 until 18-Jun-2021.
Trade #2: Trader Just Bet $7,843,500 That AFLAC Incorporated (NYSE: AFL) Will Have a Significant Move in Either Direction in 4 Weeks.
On Monday, April 19, 2021, a “smart money” trader seems to have bought 18,900 of the 21-May-21 $50.00 call options on AFL for $4.10 per share. Her outlay was $7,749,000 for these options. In what appears to be a Long Strangle Strategy (wherein the investor simultaneously buys an out-of-the-money call and an out-of-the-money put option with the same expiration date), she also seems to have bought 18,900 of the 21-May-21 $40.00 put options on AFL for $0.05 per share, which is an outlay of $94,500. Her total outlay for this long strangle strategy was $7,843,500.
AFL – Long Strangle Options Strategy
AFL will need to rise to $54.15 for the call option trade to break even — around a 1% return from the current price of $53.50. And then for every $1 the stock rises above $54.15, our “smart money” trader will make $1,890,000!
AFL will need to decline to $35.85 for the put option trade to break even — around a 33% return from the current price of $53.50. And then for every $1 the stock decreases below $35.85, our “smart money” trader will make $1,890,000!
She seems to be anticipating the underlying stock to have a significant move in either direction within the next 4 weeks.
Trade #3: Trader Just Made $1,222,000 Betting That Luminar Technologies Inc. (NASDAQ: LAZR) Will Stay Bullish For The Next 3 Weeks.
On Tuesday, April 20, 2021, a “smart money” trader seems to have bought 13,000 of the 07-May-21 $13.00 put options on LAZR for $0.31 per share. His outlay was $403,000 for these options. In what appears to be a Bull Put Spread Strategy (wherein the investor buys a put option with a lower strike price and sells a put option with a higher strike price but with the same expiry date), he also seems to have sold 13,000 of the 07-May-21 $16.00 put options on LAZR for $1.40 per share, which is an inflow of $1,820,000. In what appears to be a hedge, he also seems to have bought 13,000 of the 30-Apr-21 $13 put options on LAZR for $0.15 per share, which is an outlay of $195,000. His total inflow for this Bull Put Spread Strategy with a hedge was $1,222,000.
LAZR – Bull Put Spread Options Strategy
A Bull Put Spread Strategy is typically used to generate premium income based on a trader’s bullish view of a stock or index. He seems to be anticipating that the price of the stock would stay above $16.00 until 07-May-2021.
Trade #4: Trader Just Bet $2,740,000 That Discovery Inc Series C (NASDAQ: DISCK) Will Have a Significant Move in Either Direction in 4 Weeks.
On Monday, April 19, 2021, a “smart money” trader seems to have bought 20,000 of the 21-May-21 $32.50 call options on DISCK for $1.22 per share. Her outlay was $2,440,000 for these options. In what appears to be a Long Strangle Strategy (wherein the investor simultaneously buys an out-of-the-money call and an out-of-the-money put option with the same expiration date), she also seems to have bought 20,000 of the 21-May-21 $25.00 put options on DISCK for $0.15 per share, which is an outlay of $300,000. Her total outlay for this long strangle strategy was $2,740,000.
DISCK – Long Strangle Options Strategy
DISCK will need to rise to $33.87 for the call option trade to break even — around a 5% return from the current price of $32.33. And then for every $1 the stock rises above $33.87, our “smart money” trader will make $2,000,000!
DISCK will need to decline to $23.63 for the put option trade to break even — around a 27% return from the current price of $32.33. And then for every $1 the stock decreases below $23.63, our “smart money” trader will make $2,000,000!
She seems to be anticipating the underlying fund to have a significant move in either direction within the next 4 weeks.
Trade #5: Trader Just Made $956,400 Betting That Netflix Inc. (NASDAQ: NFLX) Will Stay Bearish For The Next ONE Week.
On Tuesday, April 20, 2021, a “smart money” trader seems to have bought 1,800 of the 30-Apr-21 $610.00 call options on NFLX for $3.26 per share. His outlay was $586,800 for these options. In what appears to be a Bear call spread Strategy (wherein the investor buys a call option with a higher strike price and sells a call option with a lower strike price, but with the same expiry date), he also seems to have sold 1,200 of the 30-Apr-21 $565.00 call options on NFLX for $12.86 per share, which is an inflow of $1,543,200. His total inflow for this Bear Call Spread Strategy was $956,400.
NFLX – Bear Call Spread Options Strategy
A Bear Call Spread strategy is typically used to generate premium income based on a trader’s bearish view of a stock or index. He seems to be anticipating that the price of the underlying stock would not cross above $565.00 until 30-Apr-2021.
Happy Trading!
— Trades of The Day Research Team
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