One of the most interesting “smart money” trades we came across yesterday was with Blackstone Inc. (NYSE: BX).
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 $3,102,750 that BX Will Stay Bullish For the Next 15 Months
On Thursday, October 28, 2021, a pro trader seems to have bought 350 of the January 20, 2023, $50 call options on BX for $88.65 per share. His outlay was $3,102,750.
BX – Option Trades
Interestingly, there seem to be multiple option trades done for BX yesterday, for the same strike price and expiration date, with the total amount translating to 100s of millions of dollars.
The trade’s breakeven point was at $138.65, meaning that BX needed to rise to $138.65 for the call option trade to break even. This is near the stock’s previous close of $139.37. For every $1 the stock rises above $138.65, our “smart money” trader will make $35,000!
On analyzing the daily chart of BX, the stock seems to have broken out of a flag pattern (marked as pink color lines). There is also a strong long-term support area (marked as a green color dotted line) near $60, and gap support near $50. These would act as an additional level of support for the stock. All this makes it likely our pro trader is bullish on BX.
BX – 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 January 20, 2023, $50 call options on BX for $88.65 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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