One of the most interesting “smart money” trades we came across yesterday was with First Solar, Inc. (NASDAQ: FSLR).
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 Bet $2,435,880 that FSLR will Rise in the Next 4 Weeks
On Monday, September 13, 2021, a pro trader seems to have bought 1,532 of the October 15, 2021, $90 call options on FSLR for $15.90 per share. Her outlay was $2,435,880.
FSLR – Option Trades
The trade’s breakeven point was at $105.90, meaning that FSLR needed to rise to $105.90 for the call option trade to break even. This is just below the stock’s previous close of $106.17. And then for every $1 the stock rises above $105.90, our “smart money” trader will make $153,200!
On analyzing the chart of FSLR, the stock seems to have broken out of a rising wedge pattern (marked as blue color lines) with a high volume. The breakout level would now act as a strong support area. All this makes it likely our pro trader is bullish on First Solar, Inc.
FSLR – Daily Chart
This lends credence to our conclusion that the pro bought these call options, as opposed to selling them.
If you agree and would like to mimic this trade, here’s how:
Buy to open the October 15, 2021, $90 call options on FSLR for $15.90 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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