What if you could mimic the moves of some of the best-informed traders on the planet? That’s the idea behind our special trading series focused on what we “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, one of the most interesting “smart money” trades we came across yesterday is with NVIDIA Corporation (NASDAQ: NVDA).
NVIDIA operates as a visual computing company worldwide. It operates in two segments, Graphics and Compute & Networking.
Trader Just Bet $4,956,000 That NVIDIA Corporation (NASDAQ: NVDA) Will Have a Significant Move in Either Direction in 3 Weeks.
On Tuesday, August 23, 2020, a “smart money” trader seems to have bought 3,000 of the 17-Sep-21 $220 call options on NVDA for $6.21 per share. His outlay was $1,863,500 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), he also seems to have bought 3,000 of the 17-Sep-21 $220 put options on NVDA for $10.31 per share, which is an outlay of $3,093,000. His total outlay for this Long Straddle Strategy was $4,956,000.
NVDA – Long Straddle Options Strategy
NVDA will need to rise to $236.52 for the call option trade to break even — around a 7% return from the current price of $219.58. And then for every $1 the stock rises above $236.52, our “smart money” trader will make $300,000!
NVDA will need to decline to $203.48 for the put option trade to break even — around a 7% return from the current price of $219.58. And then for every $1 the stock decreases below $203.48, our “smart money” trader will make $300,000!
He seems to be anticipating the underlying stock to have a significant move in either direction within the next 3 weeks.
Happy Trading!
— Trades of The Day Research Team
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