One of the Biggest
Bearish Trades I’ve Seen

Zynga Inc. (Nasdaq:ZNGA) is no stranger to big money flow.

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.

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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

Earnings, earnings, earnings – that’s the name of the game here.

  1. 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!

  1. 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.

  1. 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

Red Traffic LightOur VIX light is still red… but barely.

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…


Mark Sebastian
Founder, Profit Takeover


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