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Unusual Options Activity Report

Kyle DennisKyle Dennis ·

The market is at all-time highs… and the “million-dollar” question is whether you pile in short to play for a pullback… or position yourself for the Santa Claus rally?

This price action has many traders confused and scrambling to find trade ideas.

I don’t know about you… but I like to simplify my trading and not have to worry about what the market might do.

For the past few months, I’ve been using something known as Unusual Options Activity (UOA)… and boy has it been paying off.

We’ve all heard about the insider trading stories… and how they make millions based on non-public information.

These top 1% of the top 1% of Wall Street traders are constantly throwing down massive bets every single day… and a lot of the time, it’s ahead of a catalyst event.

They operate in the shadows of the options market, but my proprietary scanner shines a bright light on their every move…

… and I’ve figured out a 100% legal way to piggyback off their every move.

How does it all work?

Basically, I look for specific options trades that signal the smart money is piling in because they must know something… because no one is throwing six-figure (sometimes seven-figure) bets on long-shot trades.

Let me show you a real-money UOA trade.

Last week, I spotted some UOA in Uber Technologies (UBER). The Wall Street “insiders” were hammering the puts… AHEAD of earnings and its lockup expiration date.

That was a clear signal UBER could drop. All I did was follow them into the puts.

No, I didn’t know what the information was… no harm, no foul.

However, I didn’t hold into the earnings announcement because it’s safer to take profits, especially when you’re sitting in a 90% winner.

 

 


But take a wild guess what happened with UBER after its earnings announcement?

Absolute destruction!

 

 

The company got rocked on earnings… and gapped down below a key level.

These “insiders” bought the $29 put options, just below a key level (the blue horizontal line in the chart above).

Coincidence?

I think not.

The thing is… I spot these trades ALL the time, and yesterday — I spotted an interesting “smart money” options trade… one that could potentially explode soon.

 

Could Macy’s (M) Spike Ahead of Earnings?

Yesterday, a trader came in and scooped up 1,400 M November 15 2019 $16.50 calls for 30 cents. Not a massive bet — altogether the trade cost $42,000.

When it was all said and done yesterday, 2328 contracts exchanged hands on that strike price alone… and if you look at the calls (on the left side) and compare them to the puts (the right side)… there’s a lot more call activity than put activity.

If you look at the $17 strike price calls… more than 5,000 contracts exchanged hands.

That’s a signal the “insiders” might know something.

Why?

Well, Macy’s isn’t expected to report earnings until November 21… the options expire BEFORE the announcement (maybe it runs ahead of it).

Not only that, according to Finviz, the stock has 308.45M shares floating… and a short interest of a whopping 26.14%. That means a potential short squeeze is in play.

We’ve also seen some massive moves in other major department stores like Kohl’s (KSS), The TJX Companies (TJX) and Dillard’s (DDS).

So the smart money traders could be looking for the same type of move in M.

 

The Setup

Another interesting fact to note is where the stock is on the daily chart.

 


Those call buyers purchased the $16.50 strike price options (right at the blue horizontal line).

If you notice, that’s exactly where the stock opened when it gapped down in its last earnings announcement.

Typically, when we see a stock get into the gap, it runs higher… we saw M try to fill the gap back in September, but no cigar.

However, M closed above that key level yesterday… and that could be a signal that there’s demand for the stock… and if you know anything about resistance levels…

… once they break above it, they could run higher.

That said, this options trader believes there’s going to be some upside potential in M, prior to its earnings announcement.

Will they be right? Is M going to announce a massive catalyst that sends it to the moon? Are the shorts going to get squeezed?

We’ll just have to wait and see.

Right now, I’m keeping an eye on M… and if I make any moves, I’ll be sure to let my clients know.

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