Unusual Options Activity: $4.5 Million in Overnight Profits
Every Monday, we highlight the unusual options activity my scanner picks up.But we don’t always take the time to explain why it’s worth following… The idea that some trader or hedge fund knows something we don’t, just because they took a large position… I’ll admit it sounds a little bit like a conspiracy theory. Maybe some of these trades are just dumb luck. Someone with a hunch plowing into the perfect trade before a huge announcement. But time and time again, we see some unusual options activity that foreshadows a massive move. Like last week… You see, last week I spotted heavy call options volume on Bed Bath & Beyond (BBBY). It came just ahead of an earnings announcement. Clearly, whoever bought those calls was expecting a big move in a very short time. Over $350,000 in call options rolled in during the last hour or so of trading on Tuesday for BBBY. At the open on Wednesday, shares were up as much as 50%. Those calls, which expired on the 12th and 19th of this month, were up as much as 1,000% overnight. Across all the activity I spotted, the combined positions reached a peak value of $4.5 million. This one was very quick. The activity hit during the last hour of the trading day, and by the next morning they were sitting on profits. But for the activity we’re picking up here, things are still on the move… So this week, I want to check in on some of the unusual options activity I pointed out last week, just to prove to you how powerful this strategy is…
Last Week’s Unusual Options Winners
Let’s start with a few from last week. We talked about the activity on the PetMed Express (PETS) November 19 $30 calls, where a trader scooped them up at $0.80 apiece. This trader was expecting the stock to swing higher in quick fashion. These options were up to as much as 275% before the end of the week… The Fastly, Inc. (FSLY) November 5 $55 calls were up as much as 148% the day before earnings. When this trader jumped in, they needed the stock to move 15% just to hit breakeven after they paid $1.49 per contract. And they got exactly what they were looking for. A nice run into earnings before the stock fell on the announcement. Again, that was just last week… There’s plenty more unusual options activity I’ve highlighted that panned out nicely. On October 18, I highlighted calls on APA Corp. (APA). A trader bought the November 19, 2021 $27.50 calls for $1.05. On Thursday, that option traded to more than $2.50, a 138% gain in just a couple of weeks. That same day, we talked about one of my favorite trades being on XPeng (XPEV), a Chinese electric vehicle company. A trader was betting the stock would continue higher after a recent breakout. They jumped in with $780,000 on the line. Over the next two days, the stock jumped 10%. Enough to easily double this trader’s money. Not to mention, we highlighted the Tesla (TSLA) calls that expired October 29. The trader was buying the $870s and $890s calls, a ton of action. And what happened to the stock? Since the day I pointed this out, the stock surged 28%… in just 11 days. Enough for these traders to have doubled or even tripled their money in no time. Insane, right? All these big gains, massive moves, from simply following the unusual options activity. It’s a lot of fun to follow it… But really, it’s nothing compared to a brand-new strategy I’ve been working on. It all has to do with my Profit Radar, which I’ve shared with you a few times in these pages. You see, I’ve been using this radar with my subscribers for the past year. And it’s lead to gains of 109% in 1 day, 158% in 6 days, and even 269% in 6 days. I’m putting the final touches on a special presentation that, if you like trading options, you simply cannot afford to miss.Click here to be one of the first to see the details.Regards, Chad Shoop, CMT Editor, Quick Hit Profits
Chart of the Day:Elon’s Antics
If you’re a Tesla shareholder this morning, you may want to call your therapist…Tesla has been an absurd trade the past couple weeks. As Chad mentioned, the stock has risen 28% in the 11 days since he pointed out the UOA on it. A euphoric couple weeks for anyone bullish on the stock. But now, the stock is being quoted down almost 5% in premarket trading… Why? Well, Elon has been crusading against recent… let’s call them “innovative” ideas from the White House — namely the proposal to tax unrealized capital gains. So he took to Twitter over the weekend to put the fate of TSLA shares into his followers’ hands:
(Oh you better believe I voted “Yes.” I love a bit of chaos on my Monday mornings. And I don’t hold the stock, so…)Elon said he’ll abide by the poll, no matter the result. Thus the severe down move this morning. But I must say, I’ll be surprised if someone like Elon can sell such a massive portion of stock on a whim. Aren’t there forms to file for this sort of thing? In any case, it’s tough to tell how the market will react when it opens today. TSLA is running hot, so this could be the catalyst to punish it further. Large TSLA investors likely aren’t a fan of Elon’s unpredictable antics, and this is one of his worst offences yet. But still, buying the dip in TSLA over the years has hardly been a bad idea. Ultimately, my gut tells me this down move gets bid back up, against everyone’s expectations. This is a stock to watch as the week goes on… Regards, Mike Merson Managing Editor, True Options Masters
Investing has consumed my life since college. While double majoring in finance and economics at the University of North Carolina at Greensboro, I founded the university’s economics club, joined the finance club and participated in the Chartered Financial Analyst research competition to represent our school.