What if you could mimic the moves of some of the best-informed traders on the planet? That’s the idea behind our new series 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, one of the most interesting “smart money” trades we came across during the past day is Opendoor Technologies Inc. (NASDAQ: OPEN).
Opendoor Technologies Inc is an online company for transacting in residential real estate. Headquartered in San Francisco, it makes instant cash offers on homes through an online process, makes repairs on the properties it purchases, and relists them for sale.
Trader Just Bet $8,890,000 That Opendoor Technologies Inc. (NASDAQ: OPEN) Will Rise 38% in 17 Months
On Thursday, August 26, 2021, a “smart money” trader seems to have bought 35,000 of the 20-Jan-23 $15.00 call options on OPEN for $6.02 per share. Her outlay was $21,070,000 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 35,000 of the 20-Jan-23 $23.00 call options on OPEN for $3.48 per share, which is an inflow of $12,180,000. Her total outlay for this Bull Call Spread Strategy was $8,890,000.
OPEN – Bull Call Spread Options Strategy
OPEN needs to rise to $17.54 for the call option trade to break even – around a 5% return from the current price of $16.71. Then, for every $1 the stock rises above $17.54, our “smart money” trader will make $3,500,000!
She seems to be anticipating the underlying stock to surge until $23.00, which is a nearly 38% return from the current price of $16.71.
Happy Trading!
— Trades of The Day Research Team
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