Stocks have been shaky at these levels… but that’s not stopping the “smart money” from chasing alpha.
If you know me, I love following the “smart money” activity because it allows me to effortlessly generate trade ideas.
Not only that but, if you know anything about some of the largest players on the street, they have skin in the game.
Before I dole out what unusual options activity I noticed in Metlife Inc (MET), I want to reveal how I look for these plays.
When it comes to unusual options activity, I have a scanner that detects the “smart money” moves. Now, when it comes to identifying these plays…
It’s important to think about them in relative terms.
What do I mean by that?
Well, think about it like this… if a trader slams into 4,000 contracts on a single order in the SPDR S&P 500 ETF (SPY), it may seem like a large order to the untrained eye.
However, it’s really not because, on any given day, millions of contracts can trade on SPY across various classes.
Now, let’s say a stock on average trades 500 options contracts per day… but one day a trader comes in and scoops up 3,000 calls. I would consider that an example of a stock with unusual options activity.
Of course, it’s not just looking at that… I also look at how much money was behind the bet… the strike price of the options in relation to the stock price… the expiration date… and a couple of other factors.
Luckily for me, my scanner does all the heavy lifting.
It allows me to filter for noise and actually uncover where the “smart money” is actually making moves, and not their gamble trades.
Does Someone Know Something About MET?
For example, the other day, I saw a large options trade go off in MET… and I believe it was an epic bet, and this “smart money” player has skin in the game.
They purchase 8424 MET Aug $40 Calls for $1.45…
That was a whopping $1.22M bet.
At the time, the stock was trading at $36 and change… they need it to rise by 14% just to break-even by the expiration date.
Now, one thing to mention is the stock closed at $36.93 yesterday… and the August options include an earnings event.
With insurance companies gaining some strength, could MET catch a large bounce very soon?
Will it beat earnings expectations?
With MET about 30% off its 52-week highs, I wouldn’t be surprised if the stock continues to bounce and potentially break out from its recent highs.
Now, if you think this is a one-off smart money trade…
I’m sorry to say, but you’re mistaken.
I actually see options activity like this all the time.
If you want to learn how I’m able to turn this information into trade ideas and large returns… then you might want to check out my unusual options activity training workshop.