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 Bet $1,943,385 that MRNA will Stay Bullish For the Next 4 Weeks
On Friday, September 17, 2021, a pro trader seems to have bought 393 of the November 19, 2021, $420 call options on MRNA for $49.45 per share. His outlay was $1,943,385.
MRNA – Option Trade
The trade’s breakeven point is at $469.45, meaning that MRNA will need to rise to $469.45 for the call option trade to break even. This is a nearly 9% return from the current stock price of $430.05. And then for every $1 the stock rises above $469.45, our “smart money” trader will make $39,300!
On analyzing the chart of MRNA, the stock seems to have broken out of a double bottom pattern (marked in purple color), which would now act as a strong support area. The stock is also trading near the upward sloping trendline, which also offers another layer of support. All this makes it likely our pro trader is bullish on Moderna Inc.
MRNA – 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 November 19, 2021, $420 call options on MRNA for $49.45 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