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 $940,000 That United Parcel Service, Inc. (NYSE: UPS) Will Rise 6% in 7 Weeks.
On Tuesday, April 27, 2021, a “smart money” trader seems to have bought 2,000 of the 18-Jun-21 $195.00 call options on UPS for $6.20 per share. His outlay was $ 1,240,000 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 2,000 of the 18-Jun-21 $210.00 call options on UPS for $1.50 per share, which is an inflow of $300,000. His total outlay for this Bull Call Spread Strategy was $940,000.
UPS – Bull Call Spread Options Strategy
UPS will need to rise to $199.70 for the call option trade to break even — around a 1% return from the current price of $198.37. Then, for every $1 the stock rises above $199.70, our “smart money” trader will make $200,000!
He seems to be anticipating the underlying stock to surge until $210.00, which is a nearly 6% return from the current price of $198.37.
Trade #2: Trader Just Bet $4,900,000 That Advanced Micro Devices, Inc. (NASDAQ: AMD) Will Have a Significant Move in Either Direction in 7 Weeks.
On Wednesday, April 28, 2021, a “smart money” trader seems to have bought 5,000 of the 18-Jun-21 $85.00 call options on AMD for $4.65 per share. Her outlay was $2,325,000 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 5,000 of the 18-Jun-21 $85.00 put options on AMD for $5.15 per share, which is an outlay of $2,575,000. Her total outlay for this Long Straddle Strategy was $4,900,000.
AMD – Long Straddle Options Strategy
AMD will need to rise to $94.80 for the call option trade to break even — around a 13% return from the current price of $84.02. And then for every $1 the stock rises above $94.80, our “smart money” trader will make $500,000!
AMD will need to decline to $75.20 for the put option trade to break even— around an 11% return from the current price of $84.02. And then for every $1 the stock decreases below $75.20, our “smart money” trader will make $500,000!
She seems to be anticipating the underlying stock to have a significant move in either direction within the next 7 weeks.
Trade #3: Trader Just Made $39,000 Betting That Pinterest Inc. (NYSE: PINS) Will Stay Bearish For The Next 4 Months.
On Wednesday, April 28, 2021, a “smart money” trader seems to have bought 2,600 of the 20-Aug-21 $80.00 call options on PINS for $4.05 per share. His outlay was $1,053,000 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 2,000 of the 20-Aug-21 $75.00 call options on PINS for $5.46 per share, which is an inflow of $1,092,000. His total inflow for this Bear Call Spread Strategy was $39,000.
PINS – 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 PINS would not cross above $75.00 until 20-Aug-21.
Trade #4: Trader Just Bet $2,479,500 That Microvision, Inc. (NASDAQ: MVIS) Will Have a Significant Move in Either Direction in 3 Weeks.
On Monday, April 26, 2021, a “smart money” trader seems to have bought 1,900 of the 21-May-21 $25.00 call options on MVIS for $6.75 per share. Her outlay was $1,282,500 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 1,900 of the 21-May-21 $25.00 put options on MVIS for $6.30 per share, which is an outlay of $1,197,000. Her total outlay for this Long Straddle Strategy was $2,479,500.
MVIS – Long Straddle Options Strategy
MVIS will need to rise to $38.05 for the call option trade to break even — around an 81 % return from the current price of $20.99. And then for every $1 the stock rises above $38.05, our “smart money” trader will make $190,000!
MVIS will need to decline to $11.95 for the put option trade to break even— around a 43% return from the current price of $20.99. And then for every $1 the stock decreases below $11.95, our “smart money” trader will make $190,000!
She seems to be anticipating the underlying stock to have a significant move in either direction within the next 3 weeks.
Trade #5: Trader Just Bet $2,192,500 That GSX Techedu Inc. (NYSE: GSX) Will Rise 41% in 2 Weeks.
On Wednesday, April 28, 2021, a “smart money” trader seems to have bought 10,000 of the 14-May-21 $37.00 call options on GSX for $2.71 per share. His outlay was $2,710,000 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 11,250 of the 14-May-21 $50.00 call options on GSX for $0.46 per share, which is an inflow of $517,500. His total outlay for this Bull Call Spread Strategy was $2,192,500.
GSX – Bull Call Spread Options Strategy
GSX will need to rise to $39.25 for the call option trade to break even — around an 11% return from the current price of $35.51. Then, for every $1 the stock rises above $39.25, our “smart money” trader will make $1,000,000!
He seems to be anticipating the underlying stock to surge until $50.00, which is a nearly 41% return from the current price of $35.51.
Happy Trading!
— Trades of The Day Research Team