But sometimes big money is just flat-out wrong.
This is what happens when you are losing and stubborn about it…
This buyer keeps doubling down on their losing CHPT calls, and it’s costing them big-time.
This is what NOT to do.
It’s important to learn both from the SMART money moves and the stupid moves too – making sure to only piggyback the right plays.
But it isn’t always obvious whether buyers are doing something smart or ridiculous.
This is why I do a deep dive on each move I see to find out what is really happening.
Another sweeper came in with a call spread across CBOE in EEM…
EEM is up about $0.40 and this buyer paid about $0.30 for a 2-point vertical that is $4 out of the money with about 3.5 months to expire – it’s not an awful play…
But I don’t think that’s the whole story.
Here’s what I think the EEM buyer is planning…
Notice the open interest on calls…
It looks to me like they are rolling down – which means they were wrong, but they think they’ll be right soon.
This buyer is worried that EEM might not get to $46, but they want to maintain upside exposure – so they paid $600k to move the strike lower.
That’s a hefty price tag, but if they turn out to be right later, it will be worth it to them.
They still like EEM to go up, but it’s a conservative roll down because they aren’t sure EEM can make it to the original price in time.
I don’t piggyback rolldowns because that means these trades have been wrong.
So while some big money traders should give up and cut their losses, we have a shot to make a better play or learn from – and not repeat – their mistakes.
In fact, I’ve perfected a strategy that doesn’t just track and copy these big-money trades…
It shows me THE BETTER TRADE…
The trade that the big-money is ignoring.
Until next time,
August 31 2022