“Aren’t you worried the market is about to crash?”The first time I got this question was eight years ago. My old high school friend wanted to know what I, a trader, thought would happen next.And trust me, he isn’t alone. I’ve heard this question constantly since then. Just a few weeks ago, a fellow hockey dad asked what I made of all the headlines, rising inflation, and increased gas prices. If you’ve been paying attention lately, then you can probably guess my response…It doesn’t matter.
I’m an options trader. If the market crashes 50% or goes up 50% over the next two years, I still expect to make money.Fear has always driven the markets. There’s an old saying that bull markets climb a wall of worry. There’s always a reason to sell. Always a reason to expect the next big crash.Lucky for us, we don’t have to worry about it…And neither do the big money traders my scanner picked up this week.Based on these trades, they’d outright welcome a crash…
These Bears Just Threw Down $2.5M
Before we break these trades down, let me clarify something.I’m not bearish — but I’m not exceedingly bullish either.I just watch trade setups and follow the big money. Doing that, we can make money in bull and bear markets.So let’s take a look at a few stocks traders are betting will crash.First up is Chewy (CHWY), an e-commerce pet supply company. The company was a huge hit after the pandemic, but the stock has lost over 65% of its value in the last year, and one trader is expecting more pain ahead.They bought the June 17, 2022 $40 put options for $3.80 a piece, paying over $900k.Shares are set to trend in a descending triangle pattern. This trader just doesn’t see it lasting very long. They have until June to see shares break below the key support around $36.50 before they’ll make a killing.
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Another stock with a large bearish bet is CarMax (KMX), the used car retailer.This trade stuck out right away because we have a trade on the stock in my premium research service, Quick Hit Profits.It was almost identical. Off just enough that I can share it with you today…This trader grabbed the July 15, 2022 $92.50 put options for $7 a share, costing $805k total. They jumped in after CarMax reported weak earnings that caused the stock to dip nearly 10% in a single day.Based on my earnings strategy, I’m also expecting the stock to continue lower from here. So we jumped into our own put options the very same day.After that big drop, it looks like the stock is breaking below a tight downward trend channel. Any further weakness from here could mean a big payday for this trader — and my subscribers.
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And last but not least, we have a big money trade on Biogen (BIIB).For $864k, this trader bet on a drop with the May 20, 2022 $210 put option for $9.60.A quick look at the stock shows that shares are down over 50% from a peak in June of last year. Other traders may think it’s time to go bottom fishing…But not this one.And when I zoom out on the chart, I agree.The stock looks to have broken a major long-term support level. That could signal the pain is nowhere near finished for Biogen.
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This is some great action in the options market on these stocks.Whether or not you’re outright bearish, these setups are too good to ignore…And if the market does crash, these traders have a good chance at a sizeable return.I’ll be watching all of these trades in the weeks and months ahead to see if the big money was on the money once again.
Regards,
Chart of the Day: TSLA’s Make-or-Break Zone
By Mike Merson, Managing Editor, True Options Masters
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TSLA shareholders are used to roller coaster rides, but this is ridiculous…The stock lost over 40% of its value — from its all-time high of $1,200 in November, to the depths of the March blues at around $700 per share.Since then, the stock has mounted a big recovery. Enough of one to continue arguing the downtrending resistance at about $1,150, and much longer-term rising support at $985, which the stock is set to open near today.All to say, this is a make-or-break zone for TSLA stock. If you’re a bull, this is a key level to play a bounce. If you’re a bear, you want to see a break below this support before trading it to the downside.I give the edge to the bulls, personally. TSLA has had a great earnings report track record, and its next report is (naturally) on 4/20 later this week.I have almost no doubt the stock will rally off that report, and rally big. It will have the resistance to contend with, of course. But if it breaks that, a new uptrend will be in place.
Regards,
