One of the most interesting “smart money” trades we came across yesterday was with Lucid Group Inc. (NASDAQ: LCID).
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 $2,655,000 that LCID Will Continue to Climb in the Next 2 Weeks
On Friday, January 7, 2022, a pro trader seems to have bought 1,000 of the January 21, 2022, $15 call options on LCID for $26.55 per contract. His outlay was $2,655,000.
LCID – Option Trade
The trade’s breakeven point is at $41.55, meaning that LCID needed to rise to $41.55 for the call option trade to break even. This is near the stock’s previous close of $41.98. And then for every $1 the stock rises above $41.55, our “smart money” trader will make $100,000!
On analyzing the daily chart of LCID, the stock seems to have broken out of a flag pattern (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 LCID.
LCID – 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 21, 2022, $15 call options on LCID for $26.55 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
To carry out Trump's Executive Order #14196 initiative, the administration will have to partner with a handful of U.S. companies that control the "reserve accounts" sitting on trillions of dollars' worth of untapped natural resources. I've spent months digging into this – and I've identified three companies that have already been granted "emergency status" and fast-track approvals. I believe their shares could skyrocket once new capital starts moving into the sector. See the three stocks that I expect to be the biggest winners as this plan rolls.