The fourth quarter is finally here… Are you ready to make this market your personal ATM machine?
I know, I know… the market is choppy… and you never know when a barrage of “fake news” will hit the wire.
When the market is as kooky as it is… the simplest way to adapt is to look for unorthodox ways to profit in the market.
For quite some time, I’ve been using a forward-looking indicator — unusual options activity (UOA).
However, there are so many of these “unusual options activity” trades that hit the tape every day…
I have to narrow down my focus.
And that’s why I only care about UOA trades that appear speculative— trades that seem like “long shot” bets.
With my Dollar Ace system, I’m able to spot these trades and legally follow in the footsteps of Wall Street’s most informed traders — the guys who will do anything to win.
They will throw hundreds of thousands… sometimes millions of dollars on a single options play. To the naked eye, these trades look like lottery tickets, but for whatever reason, they have an uncanny ability to hit.
I’m not kidding… I just got in one of these trades the other day, In PETS, which was good for a 126% return overnight.
What did I see? And how can you replicate this trade in the future? I answer those questions and a lot more.
The other day, I sent my Dollar Ace clients my UOA watchlist — the most interest trades I see during the day and signal the stock could have a massive move in favor of those options.
My system focuses on UOA on options trading for less than a dollar… and that means you can really leverage your capital and pull in massive winners.
The one trade that stuck out to me the most was PetMed Express (PETS). Over 1,000 calls traded on the October 18, 2019 $20 calls…
… and the stock was trading $2 lower at the time. Those options in PETS aren’t too active either…
Unusual, to say the least.
The very next day, we saw even more activity in $PETS.
Of course, I took the trade in $PETS.
You might be wondering, Kyle, did you take the trade solely based on the options activity?
Well, I can’t give you a straight answer… because the UOA alerted me to the trade, but I still had to conduct my due diligence — before I alerted my clients about the trade.
There were actually a few things that stood out to me:
- The UOA in $PETS, of course.
- There was a bullish chart pattern.
- The short interest was high.
PETS had a bull flag setup… and typically, when we see this pattern, the stock breaks out.
Not only that, but at the time when we saw the UOA, the 200-day simple moving average (SMA) was right around where the strike price of those options that were purchased.
Furthermore, the stock had a high short interest.
What that means is there are a lot of people betting against the stock… and around 50% of shares are short.
According to Morningstar, 53.19% of the stock’s float is short…
What that means is if the stock releases good news, it could set up for a short squeeze.
Basically, if there’s a positive catalyst and the stock skyrockets… the traders who were short will be forced to cover.
What ends up happening is the market gets flooded with demand, and since there is very little supply… traders are paying up for the stock to close out their position.
Here’s what happened with those options… in just 1 trading day.
The great thing about trading off unusual options activity is that you don’t have to come up with your own trade ideas. You are simply following in the footsteps of what we believe to be informed, traders.
And do you know what else is cool?
And they are super easy to execute too…
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