What if you could mimic the moves of some of the best-informed traders on the planet? That’s the idea behind a new series we’re launching that’s focused on what we’ll call “smart money” option trades.
In short, we’re using Market Chameleon to scan the options market for unusual activity and identifying some of the most interesting mega trades – relatively large volume options trades we can potentially mimic… but on a smaller scale!
While we can’t be 100% certain of the exact options strategies our “smart money” traders are employing on these trades, these are our best guesses based on the information we do have.
That said, here are 5 of the most interesting “smart money” trades we came across in the past week.
Trade #1: Trader Just Bet $2,564,263 That Apple Inc. (NASDAQ: AAPL) Will Rise 14% in 9 Weeks.
On Wednesday, July 14, 2021, a “smart money” trader seems to have bought 9,061 of the 17-Sep-21 $155.00 call options on AAPL for $3.95 per share. Her outlay was $3,579,095 for these options. In what appears to be a Bull Call Spread Strategy (wherein the investor buys a call option with a lower strike price and sells a call option with a higher strike price but with the same expiry date), she also seems to have sold 9,061 of the 17-Sep-21 $170.00 call options on AAPL for $1.12 per share, which is an inflow of $1,014,832. Her total outlay for this Bull Call Spread Strategy was $2,564,263.
AAPL – Bull Call Spread Options Strategy
AAPL needs to rise to $157.83 for the call option trade to break even – around a 6% return from the current price of $149.15. Then, for every $1 the stock rises above $157.83, our “smart money” trader will make $115,000!
She seems to be anticipating the underlying stock to surge until $170, which is a nearly 14% return from the current price of $149.15.
Trade #2: Trader just made $113,600 betting that Netflix Inc. (NASDAQ: NFLX) Would Remain Within A Range For The Next 2 Weeks
On Wednesday, July 14, 2021, a “smart money” trader seems to have bought 1,136 of the 30-Jul-21 $460.00 put options on NFLX for $1.30 per share. His outlay was $147,680 for these options. In what appears to be an Iron Condor options strategy (created with four options; wherein the investor sells an out-of-the-money call and an out-of-the-money put, while simultaneously buying a further out-of-the-money call and a further out-of-the-money put), he also seems to have done the following: sold 1,136 of the 30-Jul-21 $470 put options on NFLX for $1.64 per share, translating to an inflow of $186,304; bought 1,136 of the 30-Jul-21 $630 call options on NFLX for $2.62 per share, translating to an outlay of $297,632; and sold 1,136 of the 30-Jul-21 $620 call options on NFLX for $3.28 per share, translating to an inflow of $372,608. His total inflow for this Iron Condor options strategy was $113,600.
NFLX – Iron Condor Options Strategy
An Iron Condor options strategy is typically used to generate premium income. He seems to be anticipating that the price of the underlying stock would remain between $470.00 and $620.00 until 30-Jul-2021. The stock could surge until $620.00 in the next 2 weeks, which is a nearly 13% return from the current price of $547.95.
Trade #3: Trader Just Bet $37,200,000 That Trade Desk Inc. (NASDAQ: TTD) Will Have a Significant Move in Either Direction in 4 Weeks.
On Monday, July 12, 2021, a “smart money” trader seems to have bought 30,000 of the 20-Aug-21 $75.00 call options on TTD for $7.60 per share. Her outlay was $22,800,000 for these options. In what appears to be a Long Straddle Strategy (wherein the investor simultaneously purchases a call option and a put option on the same underlying asset with the same expiration date and strike price), she also seems to have bought 30,000 of the 20-Aug-21 $75.00 put options on TTD for $4.80 per share, which is an outlay of $ 14,400,000. Her total outlay for this Long Straddle Strategy was $37,200,000.
TTD – Long Straddle Options Strategy
TTD will need to rise to $87.40 for the call option trade to break even — around a 19% return from the current price of $73.63. And then for every $1 the stock rises above $87.40, our “smart money” trader will make $3,000,000!
TTD will need to decline to $62.60 for the put option trade to break even — around a 15% return from the current price of $73.63. And then for every $1 the stock decreases below $62.60, our “smart money” trader will make $3,000,000!
She seems to be anticipating the underlying stock to have a significant move in either direction within the next 4 weeks.
Trade #4: Trader Just Bet $1,700,000 That iShares iBoxx $ High Yield Corporate Bond ETF (NYSE: HYG) Will Decline 11% in 9 Weeks.
On Tuesday, July 13, 2021, a “smart money” trader seems to have bought 25,000 of the 17-Sep-21 $87.00 put options on HYG for $0.83 per share. His outlay was $2,075,000 for these options. In what appears to be a Bear Put Spread Strategy (wherein the investor buys a put option with a higher strike price and sells a put option with a lower strike price but with the same expiry date), he also seems to have sold 25,000 of the 17-Sep-21 $78.00 put options on HYG for $0.15 per share, which is an inflow of $375,000. His total outlay for this Bear Put Spread Strategy was $1,700,000.
HYG – Bear Put Spread Options Strategy
HYG needs to decline to $86.32 for the put option trade to break even — around a 2% return from the current price of $87.85. Then, for every $1 the stock moves below $86.32, our “smart money” trader will make $2,500,000! It may be noted that the trader’s profit will be limited till the price of $78.00 as he had sold the $78.00 strike price put options.
He seems to be anticipating the underlying stock to decline until $78.00, which is a nearly 11% return from the current price of $87.85.
Trade #5: Trader Just Bet $1,540,000 That Delta Air Lines, Inc. (NYSE: DAL) Will Rise 29% in 6 Months.
On Wednesday, July 14, 2020, a “smart money” trader seems to have bought 10,000 of the 21-Jan-22 $45.00 call options on DAL for $2.58 per share. Her outlay was $ 2,580,000 for these options. In what appears to be a Bull Call Spread Strategy (wherein the investor buys a call option with a lower strike price and sells a call option with a higher strike price but with the same expiry date), she also seems to have sold 10,000 of the 21-Jan-22 $52.50 call options on DAL for $1.04 per share, which is an inflow of $1,040,000. Her total outlay for this Bull Call Spread Strategy was $1,540,000.
DAL – Bull Call Spread Options Strategy
DAL needs to rise to $46.54 for the call option trade to break even – around a 14% return from the current price of $40.68. Then, for every $1 the stock rises above $46.54, our “smart money” trader will make $1,000,000!
She seems to be anticipating the underlying stock to surge until $52.50, which is a nearly 29% return from the current price of $40.68.
Happy Trading!
— Trades of The Day Research Team
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