One of the most interesting “smart money” trades we came across yesterday was with Moderna Inc. (NASDAQ: MRNA).
If you’re new here, a “smart money” trade is a relatively large volume option trade most likely made by a pro trader. The idea is to analyze unusual options activity, identify an interesting “smart money” trade, and then make our best guess as to:
- Which direction the trader thinks the stock is headed
- How much they think it will rise (or fall), and
- In what time frame this will all happen.
If we like what we see after putting all these pieces together, we can mimic the “smart money” trade (on a smaller scale), and potentially ride alongside our pro trader to profits. With all this in mind…
A Pro Trader Just Made $1,420,00 Betting that MRNA Inc. will Stay Above $400 For the Next 5 Weeks
On Thursday, September 09, 2021, a pro trader seems to have sold 1,000 of the October 15, 2021, $400 put options on MRNA Inc. for $14.20 per share. Her inflow was $1,420,000.
MRNA – Options Trade
MRNA Inc. will need to stay above $400 in the next five weeks so that the trader can buy back the 15-Oct-21 $400.00 put options for next to nothing. And then our “smart money” trader will get to keep the $1,420,000 she had received when selling the 15-Oct-21 $400.00 put options.
On analyzing the chart of MRNA Inc., the stock seems to have broken out of a double bottom pattern (marked in blue color). This level (around $410) would now act as a strong support area. All this makes it likely our pro trader is bullish on MRNA Inc.
MRNA – Daily Chart
This lends credence to our conclusion that the pro sold these put options, as opposed to buying them.
If you agree and would like to mimic this trade, here’s how:
Sell to open the October 15, 2021, $400 put options on MRNA Inc. for $14.20 or better.
As always, depending on your risk appetite, do remember to set a stop-loss for the options trade to avoid significant losses.
Happy Trading!
— Trades of The Day Research Team
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