One of the Biggest
Bearish Trades I’ve Seen
And leading into earnings, this video game stock was seeing all kinds of bullish action:
Click To Enlarge
Yesterday, someone sold the December $9 calls and bought the January $8-$11 call spread as a package deal, betting on a post-earnings bullish move in ZNGA.
Based on all the order flow we’ve seen in this name, I think this thing is heading back to 10 bucks.
That said, every time ZNGA hits $10, it runs into a brick wall. This isn’t a $20 or a $30 name. But it’s got some real upside potential, especially after last night’s positive earnings.
You can piggyback this play with the January 21, 2022 $9 calls. At less than $1, these are a great asymmetric trade – just like the sub-$1 options we play every single day in the Profit Revolution.
Just yesterday, in fact, we took a profit of 140% in four trading days with a 78-cent option on Intel Corp. (Nasdaq:INTC).
And with ZNGA jumping to $9.50 or $9.75 per share post-earnings, these calls could make even more.
Want more cheap options trades just like this?
Every trade I recommend at the Profit Revolution is $1 or less with the potential to pay out 100% or more in under a month’s time.
But listen up – because ZNGA isn’t the only stock seeing big money flow today.
Introducing COMPASS Pathways PLC (Nasdaq:CMPS), a psychedelics company that’s been absolutely slaughtered over the last week.
Click To Enlarge| CMPS Nov 1-9
And I just came across one of the biggest bearish trades I’ve seen in a while:
Click To Enlarge
This stock is already below $45 per share, down 14% in the past five trading days. But this big money trader thinks it’s going even lower.
This November $35-$40 put spread is extremely bearish. It’s not a hedge with stock against it.
That type of aggressive bearish play means bad things are ahead for CMPS. This thing looks like it’s going all the way down to $30 – and on Friday, it was $48 per share.
But this is a difficult one to play. Why? Because the IV is at 277%.
Click To Enlarge| CMPS IV Nov 1-9
You can’t just buy a straight-up option on a stock like this. But what you can do is construct a butterfly.
Buy the November $25 puts for $6.50. Sell two of the $20 puts for $2. And buy the $15 puts for $0.90.
With a net debit around $3.50, you can be short between $35-$20 on CMPS.
Earnings x3: Mark’s Watchlist
- Roblox Corp. (NYSE:RBLX)
RBLX just blew its earnings out of the water, doubling its revenue from last quarter and sending its shares near a new all-time high.
I covered this stock – and exactly how to play it – during today’s free Profit Takeover show.
If you missed it, I’m live again tomorrow at 12:30 PM ET. Click here to add that event to your calendar!
- AMC Entertainment Holdings Inc. (NYSE:AMC)
The meme stock reported better-than-expected earnings. It was a loss, sure, but a smaller loss than expected.
Still, however, the stock is crashing this morning, opening down 6% – and now, I’m watching this name to see just how low it can go.
- Nio Inc. (NYSE:NIO)
NIO got a pop with the other EV stocks yesterday after the infrastructure bill was passed. But here’s the thing – NIO is a Chinese company. It’s not going to see much money from the U.S.
I think this name is overbought – and I’m looking for a fade.
That said, the company reports earnings tonight. And I’m not interested in a pre-report play on NIO. Check back tomorrow to see how this stock reacts…
And how I’m fading the move.
VIX Traffic Light
We’re in a clearly volatile period right now, the VIX teetering on the edge of 18 with the market a bit toppy.
Part of this could be due to expiration next week, which is why the light is red right now.
Right now, I think we’ll see the VIX drop from here. But with that said, I wouldn’t be surprised to see our light turn yellow before week’s end.
Check back tomorrow to see where we go from here…
Founder, Profit Takeover
November 09 2021