trade from Trade Alert

Discussion in 'Options' started by ETJ, May 15, 2019.

  1. ETJ


    May 9 at 9:46 AM ·
    $STMP implosion yields windfall for recent put buyer. Shares off $45, or 54%, to $38 this morning following disappointing earnings, reduced guidance, and rating cuts, surprising option traders who had expected a move near 14% based on last night's closing straddle price. While pre-earnings options flow near 10K contracts was moderately heavy, the most impressive action took place Tuesday, when an afternoon buyer accumulated 1500 May 10th 65 puts for 81c in a number of late afternoon sweeps when shares were near $83.30. At trade time, these puts were 10 delta, and nearly 22% out of the money and total premium spent was $121K. Now $27 in the money, position value is an astounding $4M- a two-day return of well over 3000%.
  2. Jack W

    Jack W

    Love that return. Whoa.
  3. Overnight


    You options guys are nuts. Total crazy.
  4. I still haven't hit these returns on any of my options, usually between 50-100%.
  5. I use Snider Advisors and I had STMP recommended to me as a covered call and I lost my whole call diagonal. I learned from that deal to read a chart to select whether to use a call diagonal or put diagonal on their recommendations and to buy my long option longer out in time and deeper in the money so I can keep the diagonal in business.
  6. Nice play. Probably this trade was triggered by a deep study or by someone in the know.
    I always wonder which one could be the pattern to look at in order to spot beforehands these very informed trades. I write down some possible flags in no particular order:

    - Few days to option expiration
    - Small/medium cap
    - Trade on the ask
    - Considerable transaction size
  7. I use the top MACD for calls and the bottom MACD for puts. I won't always get it right, but I shouldn't have gone with calls for STMP when puts had such a good track record. And my long call was a 45 and it should have been 30 or lower, but who knew it would fall that far?

    Screen Shot 05-19-19 at 01.59 PM.PNG
    arturo100 likes this.
  8. Good Point. Reasoning on general terms can help you in avoiding lots of mistakes. However, I feel someone here must have been quite knowledgeable about earnings. Or calculated them very well.
  9. I needed something on the chart so I don't skimp on buying long options DITM.

    Screen Shot 05-20-19 at 09.49 PM 001.PNG