Holy Bananas Play in MMM

I spotted a crazy complex reversal big money play in MMM.

Essentially, this trader wants to be long or short MMM but remove the influence or sensitivity that the underlying security price has on the options price – called “delta exposure.”

Here’s what I learned from this MMM play:

This trader is protected whether MMM goes up or down… and they don’t have to worry about delta risk.

It’s a very VERY specific type of volatility play.

So they think that MMM is going to move – they just aren’t sure which direction and they want to be protected on both sides. 

But here’s why I WOULDN’T play MMM right now – and where I’m looking instead… 

The margin on this move in MMM is way too high for me to make a play – this is 4th tier voodoo stuff that is good to learn from, but not something that’s actionable for me.

But here are two names that do have actionable trades – 

1. Owl Rock Capital Corp (NYSE:ORCC)

ORCC isn’t a big name to watch, and it doesn’t have much trading volume…

But a trader bought 15,000 puts for $0.55 in ORCC betting that it’s heading lower before earnings in December.

Currently ORCC is trading at $13.09…

Image from wallstreet.io

But if mid-market debt and lending has issues over the next quarter, this stock could drop.

I’ll watch ORCC and if this trader is right, I’ll find a way to play it.

2. Medical Properties Trust Inc (NYSE:MPW)

We were short MPW in Inside Money Trader, after seeing a massive put spread go up at the beginning of August.

This trade is up and ripe for taking profit. 

MPW is currently trading at $14.62 and might not head much lower over the next few days. 

Image from wallstreet.io

We’ve made the easy money here, so if you are short MPW, take your profits now.

Until next time,

Mark Sebastian

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