Trading Tips Blog

Trader bets big on moderate rally this month. February 28th call options with a $25 strike price on L Brands Inc (LB) saw a 100-fold surge in volume, going from 100 open contracts to around 10,000 trade hands. The bet, expiring in 21 days, is that shares will rally to $25 from their current price near $24.50, or just over 2 percent. The option buyer also paid about $1.15 for the contract, so shares would need to clear $26.15 to profit the buyer ...
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Trader bets on drop in shares through June. June 2020 $185 put options on Lululemon (LULU) saw a 9-fold rise in volume, going from 141 open contracts to over 1,300. The trade, expiring in 134 days, implies about a 25 percent drop in shares from their current price near $245. Shares have been in an uptrend for several months and are near all-time highs. The trader also paid about $2.63 for the put options, so shares would need to ...
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Trader bets on decline in the next month. March 13th $200 put options on Facebook (FB) saw a 83-fold rise in volume, going from 106 open contracts to over 8,850. The bet, expiring in 37 days, would require shares to drop about 4 percent between now and expiration in March. The trader paid about $3.30 per contract, so shares would need to drop under $196 by then to profit at expiration. Facebook recently reported solid earnings, but shares sold off, so the trader may ...
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Traders bet on continued rally after double-digit move higher Monday. Shares of Tesla Motors (TSLA) rose over 15 percent in trading on the news that the company would be able to expand in China. What’s more, since earnings last week, shares are up over 25 percent. That’s led to some traders betting on a further rally. The February 7th $805 call options saw over 1,800 contracts trade compared to a prior open interest of 100—an 18-fold rise in volume. The bet, expiring in 3 ...
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Trader bets on 17 percent rally in shares in the next year. January 2021 $235 call options on Visa (V) saw a four-fold rise in volume, going from 200 contracts to over 750. The bet, expiring 347 days, is that shares will move higher from around $200 by about 17 percent. The buyer also paid about $4.75 per share, so they’ll only make a profit at expiration if shares hit new all-time highs of $240. The buy comes after shares dropped slightly after ...
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With the new year comes new trading opportunities. One method traders use to take advantage of the new year is to screen for companies that underperformed in the prior year. Buying these “dogs” tends to make for a market-beating year, on average. Trading Tips’ Andrew Packer explains in our latest video ...
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Trader bets on rally with in-the-money calls. April 2020 $34 call options on AT&T (T) saw a 13-fold rise in volume, going from 144 open contracts to nearly 1,900 trade hands. The bet, expiring in 77 days, is about $3 in-the-money. The buyer of the calls expects a further rally from here, and can profit from any dollar-for-dollar move in shares. The buyer paid $3.50 per contract on average, or about $3 of “moneyness” of the option and $0.50 in time premium. Shares would ...
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Trader bets on rally in next week. With 8 days until expiration, the February 7th $16 call options on FireEye (FEYE) saw an explosion in volume, going from 170 open contracts to over 7,350—a 43-fold rise. The bet, which is essentially at-the-money as shares trade around $16, cost the option buyer about $0.50, or $50 per contract. The trade will profit the buyer only if shares clear $16.50 by the option expiration. With FireEye reporting earnings on February 5th, this trade is a bet ...
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