One of the most interesting “smart money” trades we came across yesterday was with Beyond Meat Inc. (NASDAQ: BYND).
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 $9,216,000 that BYND Will Continue to Climb in the Next 1 Week
On Thursday, July 07, 2022, a pro trader seems to have bought 3,200 of the July 15, 2022, $2.50 call options on BYND for $28.80 per contract. Her outlay was $9,216,000.
The trade’s breakeven point is at $31.30, meaning that BYND needs to rise to $31.30 for the call option trade to break even. The stock’s previous close of $31.76 is already above this breakeven price. And then for every $1 the stock rises above $31.30, our “smart money” trader will make $320,000!
On analyzing the daily chart of BYND, the stock seems to have broken out of a downward sloping trend channel (marked as blue color lines). This breakout level would now act as a strong support area. This makes it likely that our pro trader is bullish on BYND.
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 July 15, 2022, $2.50 call options on BYND for $28.80 per contract or better.
As always, depending on your risk appetite, do remember to set a stop-loss for the options trade to avoid significant losses.
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