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 $4,125,000 That iShares MSCI Canada ETF (NYSE: EWC) Will Decline 33% in 16 Months.
On Monday, August 02, 2021, a “smart money” trader seems to have bought 25,000 of the 16-Dec-22 $35.00 put options on EWC for $1.70 per share. His outlay was $4,250,000 for these options. In what appears to be a Bear Put Spread Strategy (wherein the investor buys a put option with a higher strike price and sells a put option with a lower strike price but with the same expiry date), he also seems to have sold 25,000 of the 16-Dec-22 $25.00 put options on EWC for $0.05 per share, which is an inflow of $125,000. His total outlay for this Bear Put Spread Strategy was $4,125,000.
EWC – Bear Put Spread Options Strategy
EWC needs to decline to $33.35 for the put option trade to break even — around a 10% return from the current price of $37.19. Then, for every $1 the stock moves below $33.35, our “smart money” trader will make $2,500,000! It may be noted that the trader’s profit will be limited till the price of $25.00 as he had sold the $25.00 strike price put options.
He seems to be anticipating the underlying index to decline until $25.00, which is a nearly 33% return from the current price of $37.19.
Trade #2: Trader Just Bet $1,420,000 That Advanced Micro Devices, Inc. (NASDAQ: AMD) Will Rise 9.50% in 11 Weeks
On Wednesday, August 04, 2021, a “smart money” trader seems to have bought 4,000 of the 15-Oct-21 $120.00 call options on AMD for $11.75 per share. Her outlay was $4,700,000 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), she also seems to have sold 4,000 of the 15-Oct-21 $130.00 call options on AMD for $8.20 per share, which is an inflow of $3,280,000. Her total outlay for this Bull Call Spread Strategy was $1,420,000.
AMD- Bull Call Spread Options Strategy
AMD needs to rise to $123.55 for the call option trade to break even – around a 4% return from the current price of $118.77. Then, for every $1 the stock rises above $123.55, our “smart money” trader will make $400,000!
She seems to be anticipating the underlying stock to surge until $130.00, which is a nearly 9.5% return from the current price of $118.77.
Trade #3: Trader Just Made $1,175,000 Betting That Moderna Inc. (NASDAQ: MRNA) Will Stay Bullish For The Next 3 Weeks.
On Wednesday, August 04, 2021, a “smart money” trader seems to have bought 2,500 of the 27-Aug-21 $320.00 put options on MRNA for $2.30 per share. His outlay was $575,000 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 2,500 of the 27-Aug-21 $350.00 put options on MRNA for $7.00 per share, which is an inflow of $1,750,000. His total inflow for this Bull Put Spread Strategy was $1,175,000.
MRNA – 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 $350.00 until 27-Aug-2021. The stock’s previous close was $419.05.
Trade #4: Trader Just Made $1,044,000 Betting That Uber Technologies Inc. (NYSE: UBER) Will Stay Bearish For The Next 6 Months.
On Tuesday, August 03, 2021, a “smart money” trader seems to have bought 17,400 of the 21-Jan-22 $60.00 call options on UBER for $0.90 per share. Her outlay was $1,566,000 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), she also seems to have sold 17,400 of the 21-Jan-22 $55.00 call options on UBER for $1.50 per share, which is an inflow of $2,610,000. Her total inflow for this Bear Call Spread Strategy was $1,044,000.
UBER- 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. She seems to be anticipating that the price of the underlying stock would not cross above $55.00 until 21-Jan-2022.
Trade #5: Trader Just Bet $2,901,900 That Pinterest Inc. (NYSE: PINS) Will Have a Significant Move in Either Direction in 2 Weeks.
On Tuesday, August 03, 2021, a “smart money” trader seems to have bought 1,700 of the 20-Aug-21 $76.00 call options on PINS for $0.10 per share. His outlay was $17,000 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), he also seems to have bought 1,700 of the 20-Aug-21 $76.00 put options on PINS for $17.17 per share, which is an outlay of $2,918,900. His total outlay for this Long Straddle Strategy was $2,901,900.
PINS – Long Straddle Options Strategy
PINS will need to rise to $93.27 for the call option trade to break even — around a 55% return from the current price of $60.13. And then for every $1 the stock rises above $93.27, our “smart money” trader will make $170,000!
PINS will need to decline to $58.73 for the put option trade to break even — around a 2% return from the current price of $60.13. And then for every $1 the stock decreases below $58.73, our “smart money” trader will make $170,000!
He seems to be anticipating the underlying stock to have a significant move in either direction within the next 2 weeks.
Happy Trading!
— Trades of The Day Research Team
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