Something just occurred to me.Every Monday, we run through some of the previous week’s boldest Big Money trades… But what we don’t cover enough of is why. Why do we follow these trades from week to week? Well, looking back through some of the trades we’ve featured, the answer is clear… There is major money to be made following these trades. The results I found were crazy. There was a 100%, 300%, and even 1,000% gain in less than two weeks. I hope you’re not missing out on all this action… So today, I want to slow down, take a step back, and show you how I spot the Big Money trades we’ve looked at in True Options Masters. (Caution: After reading this, you will never want to miss a Big Money Monday issue again.)
What Are Big Money Trades?
A Big Money trade — also called “unusual options activity” — stands out because it screams confidence from the trader.Even so, these trades aren’t easy to spot. I have to run down a thorough checklist to make sure the trade is truly unusual. By doing this, I weed out any option spreads… clear hedges… sell-to-open positions… and conservative trades. I don’t want that soft stuff. I want the absolute BIGGEST, boldest, and best potential gains when we run through these. That’s why I look for an out-of-the-money strike price with a hefty amount of premium — at least $100k. Once I spot this activity, I dive into the price charts to see if it’s a bet I can get behind. Even if I don’t like the trade, though, I don’t throw it out… Because I know the trader is willing to risk a ton of money on it. Maybe they know something I don’t. That’s one of the best things about following Big Money trades — you essentially get to be a fly on the wall of a hedge fund. Because when you see bets like $800,000 on one put option? $2.4 million on a one-week call option? That’s not your average retail trader. This is serious money. It doesn’t get tossed around lightly. That’s why we pay attention to these trades. We’ve been covering this activity every Monday since June of 2021. That’s nearly 52 weeks’ worth of actionable Big Money trades… And you could’ve experienced some phenomenal returns if you jumped into some of them. Not all of the Big Money trades worked out, let’s be clear about that. Some turned out to be clear losers, like our bullish energy plays back in April. But other trades returned double- and triple-digit gains — with many still having time to play out. Take a look…
Fortune Favors the Bold
On March 14, I highlighted a big money trade on Netflix (NFLX). The trader laid down $808,000 on the January 20, 2023 $250 put options. The day they placed that trade, the option closed at $22.70… Last week, that same option was above $90! That’s nearly a 300% return… and it’s only May. They still have eight months left. The next week, I spotted a bearish trade on iRobot (IRBT).If you bought the May 20, 2022, $60 put options after I shared this trade, you’d be sitting on an 88% return. Had you jumped in when this trader did, you’d be up over 100%. On April 11, we looked at a short-term earnings bet on Delta Airlines (DAL). The trader put down $110,000 looking for a one-week rally. Sure enough, DAL jumped 10% after earnings — exactly what they were betting on. Moving on to April 18, you could’ve landed a 199% gain… If, that is, you jumped into the Chewy (CHWY) June 17 $40 put options I sent you. This trader walked away with as much as $2.8 million in straight profits. But our trade on May 2 is what it’s all about. This trader scooped up the May 13 $105 put option on Coinbase (COIN) for $1.6 million. Again, this isn’t chump change. This is some serious money betting on a quick decline in the stock. And boy did they get it. The stock sunk a whopping 55%. And this trader’s put options soared as much as 1,000% after the earnings drop last week. Incredible. And all you had to do to profit was follow the Big Money trades. Before you jump into these trades, though, do your due diligence. Research the stock. Look at the price action. Decide how much money you can allocate to the trade. These traders may have millions to blow, but most of us don’t. Pick your trades carefully, and you could catch the next 10x gain…
Chad Shoop, CMTEditor, True Options Masters
P.S. Did you catch my latest Quick Takes LIVE? If not, be sure to watch through the recording. Because for every ticker that viewers submitted, I look at the Big Money action. You saw today how powerful these trades can be. And I have a feeling you don’t want to miss what the Big Money had to say about Apple and Cameco… Click below to watch my latest edition of Quick Takes LIVE.
Chart of the Day:Round Trip for U.S. Stocks, Only $122!
By Mike Merson, Managing Editor, True Options Masters
(Click here to view larger image.)
It’s been a while since I took a long-term look at the stock market. So long that I’d forgotten about these two blue lines I had drawn all the way back at the first pandemic bounce in 2020.This analysis is about as simple as it gets. These lines serve as long-term support and resistance for the S&P 500 going back to 2010. The fact that the channel widens over time is testament to how much more volatile stocks have become in recent years. SPY, as we all know, has fallen off a cliff in 2022. The index was down nearly 20% at the lows, barely staving off the textbook bear market definition in last week’s recovery. But that’s also after a near 50% rally in just over one year. If you think of the second half of 2020 as a breakout of this massive channel, with a mild retest in October, it sure looks like stocks are going to come back and test the top of that resistance as support again. That would put SPY at around $360, which would equate to a loss of $122 per share — or about $110 billion in value — from the peak. If we get to that level, I would find it hard not to start aggressively buying stocks. We could always fall lower, but 25% from the highs seems like the right sort of move before the market finds its footing.
Mike Merson Managing Editor, True Options Masters