Trading Tips Blog

Bet on further rally in shares.
The June 2020 $205 call options on
Alibaba Group (BABA) saw over 5,200 contracts trade, a 7-fold surge in volume. The trader is betting that shares, currently around $187, will rally about 9.6 percent higher in the next 224 days—a solid bet if some of the trade war truce headlines prove true this time. Based on the price paid by the trader of $12 per contract, they’ll make a profit if shares are at least $217 come ...
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In-the-money call buying suggests upside.
March 2020 $25 call options on
Uber (UBER) saw over 2,500 contracts trade, a 13-fold increase in volume from the previous open interest of 192. With shares around $26.50, the option is about $1.50 in-the-money, and should move dollar-for-dollar higher with shares in the next 134 days before expiration, less the time premium. The buying comes after the company reported good earnings—but that it also burned through substantial cash—sending shares to post-IPO lows. An in-the-money bet is more expensive ...
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Surge in call buying after company repositions portfolio for higher dividends and buybacks.
June 2020 $160 call options on
JP Morgan Chase (JPM) saw heavy trading, with over 1,400 contracts trading against a prior open interest of 100. The bet, with shares at $130, is for a $30 rise in the next 226 days—or a 12.3 percent jump in price. That’s certainly achievable, given reports that the big bank readjusted its portfolio out of $130 billion in cash and into bonds. The bank ...
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Investing, at its core, is about finding value and waiting for the rest of the market to recognize that value. At least, that’s the short, simplified version of investing as understood by Warren Buffett. With his track record, it’s clear that he’s on to something. But value can change over time, and Buffett’s track record and shifting investment portfolio reflects that trend as well.To learn more watch our video ...
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Surge in calls expiring Friday.
The November 8th $52 call options on
Micron (MU) saw over 2,700 contracts trade against a prior open interest of 256, an 11-fold surge in volume. Given that the option expires on Friday, and with Micron shares around $49.50, shares of the company would need to rally another $2.50 for the option to close in-the-money. As market sentiment has improved on trade issues, tech companies like Micron could move that much higher this week.
Action to take: Micron shares ...
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In-the-money puts suggests bearish move ahead.
The April 2020 $17 put options on
Hanesbrands (HBI) saw over 13,700 contracts trade, a 68-fold surge in volume. Oddly, with shares of the company already at $15.50, the option is already about $1.50 in-the-money, and should move dollar-for-dollar with shares lower from here. At a price of $2.70, the put buyer really paid just $1.20 in premium, and shares would need to only slip to $14 for the put buyer to make money by April. Hanesbrands sells ...
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Multiple insiders buy after earnings.
A number of insiders at
Diebold Nixdorf (DBD) bought shares following earnings. The buys included multiple directors, a Senior Vice President of Services, and a 28,000 share buy from the President and CEO. The CEO’s buy came to nearly $195,000, and most directors picked up around $50,000 in shares. The SVP bought nearly $7,000 in shares. Insider data shows a number of insider buys this year, with only one sale. Diebold Nixdorf provides commerce solutions for financial institutions ...
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At-the-money put buying suggests drop
Over 6,050 contracts traded on the November 15th, 2019 $30.50 put option on JD.com (JD). That’s a 17-fold surge in volume against the prior open interest of 354 contracts. The option has 14 days left before expiration, and shares of JD are at $31.24, so they’d still need to drop for the option to close in-the-money. Adding in the $0.80 option premium, and traders are betting on a drop under $30. The Chinese e-commerce giant often has some ...
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