Just one day after the launch of Dollar Ace… and I have my first teachable moment to share with you. The trade was in YELP… a 100% winner that took a few hours to accomplish… one so good the options guys on CNBC couldn’t stop talking about it…
Now, before I get into the details behind the trade and why it was such a no-brainer, let me briefly tell you about Dollar Ace, in case you haven’t heard yet or need further clarification.
Quite simply, it’s my greatest trading breakthrough to date (I know, a bold statement coming from someone who has made over $7,000,000 in career trading profits before the age of 30).
You see, every single day, financial powerhouses like hedge funds, pensions, and sovereign wealth funds, use options as their weapons of choice. Often for the same reason you and I use them: leverage and risk management.
These speculators sometimes risk millions of dollars on a single position. To the naked eye, they may appear as “long shots” but as you’ll soon find out… they are trading off more than just a hunch.
Dollar Ace focuses on unusual options activity on options that are trading for a buck or less.
And the beauty behind these trades is that they work regardless of what’s happening with the China trade war or, whatever the President decides to tweet about next.
For example, while most stocks were selling off yesterday, my proprietary options scanner was picking up on heavy bullish action in YELP– that sent the stock soaring by 4% (and some options contracts by 100%).
YELP Call Activity: Lucky Bet or Did Someone Know Something?
As you know, it’s been a tough market for position trading because of all the China trade rumors…
However, it didn’t stop “insiders” from aggressively scooping up calls in YELP yesterday. Now, on a typical day, YELP will trade about 3,500 call contracts. However, yesterday there were a whopping 33,000 contracts traded– NINE TIMES the typical action.
What made it even more impressive, at the time, the options which were traded were out-of-the-money and set to expire worthless on Friday.
When YELP opened for trading on Tuesday, it was trading at $32.32. And with the rest of the market selling off, it was almost certain that this stock would too… but here’s why it didn’t:
- The options traded were out-of-the-money: hundreds of thousands of dollars spent on a long-shot bet
- The options expire this week: in other words, the stock has to move right away or these contracts will expire worthless
- Volume greater than open interest: when volume is greater than open interest, it indicates a new position is being placed.
- Multiple strike prices traded: Not just one single bet, but a series of them were placed.
- Reckless options trading: “Insiders” were paying up for calls (on the ask side or above it). Institutional investors can fight for great prices because of the size they trade. However, they didn’t care about that with YELP, they were buying them all the way up.
- No known catalyst: YELP doesn’t have earnings until November. So this trade was based on an “unknown catalyst”
Now, they were mainly going after the weekly options, the $32.50 calls and the $33 strike.
The $33 calls gained 283% on the day. And the $32.50s surged by 225%
One trader started buying the $32.50 calls for $0.60, about 30 minutes after the opening bell… and the call buying didn’t stop.
399 YELP Aug 30th 32.5 Calls $0.604 ASKSIDE [MULTI] 10:06:22.580 IV=47.7% +7.9 NOM 1 x $0.51 – $0.64 x 1 BZX OPENING
Their $24K “long shot” bet was worth a cool $51,870 in just a few hours…
My proprietary scanner was able to pick up on the options flow early enough to not only get in the trade but also alert clients about the opportunity.
What did these “insiders” know? I don’t know… but does it really matter? They gave us the strike price to trade, as well as the optimal expiration period. What else do you need?
The great thing is, this isn’t a one-off. On any given day, I’ll be finding 1-4 of these “can’t miss” trades and alerting subscribers.
And while I did decide to take profits… this one is far from over. You see, right before the close, someone came in and bought more calls!
259 YELP Aug 30th 33.0 Calls $0.92 MIDMKT [BZX] 15:58:54
Stay tuned for this one… Now, I put this video together that goes into greater detail behind the trades I find, as well as my Dollar Ace strategy. However, I’ll be taking it down very soon because I’m worried I might have given away too much of my secret sauce. So check it out now, before it’s gone.
That said, you still have time to lock in a lifetime membership at this ridiculous price!