Like getting tomorrow’s newspaper today
There’s a mistake I see a lot of rookie options traders make, and it breaks my heart every time.
A stock is rallying big on headline news, and these newbie traders try to chase after the move by buying call options… AFTER the shares have already broken out.
Unless you’re lucky enough to trip and fall into one of those rare “to the moon” stocks that happens to rip out on a multi-day short squeeze, you’re not likely to win on too many trades with this “follow the headlines” strategy.
But of course, there’s no way to trade AHEAD of the news…
OR IS THERE?!?
OK, yes, I’m being a little dramatic for effect here – but follow along here as I break down an absolutely explosive trade in Walmart (WMT) weekly call options that I played with my Project 303 members to start the week.
Then, just try to tell me this options scanner isn’t like having a Back to the Future-style sports almanac tucked in your back pocket.
Go on, I dare you.
Where’s the money?
Here’s the big money WMT trade that lit up my PennySpike scanner on Monday:
That definitely qualified as a baller-sized bet, considering the weekly options were:
(A) Out of the money, with WMT at $140.74; and
(B) Set to expire in a matter of mere days, on Oct. 22.
So while it’s hardly a hot “meme stock” or headline-driven crypto name, boring old WMT calls were suddenly blazing up my scanner.
How did we get some?
The play here was simple, from my perspective – because that’s what my scanner-based options strategy is all about.
My move? Follow the big money by picking up those same low-priced WMT $143 calls set to expire at the end of the week.
Here’s the exact recommendation I sent out to my Project 303 members:
Action to Take: Buy-to-open Walmart Inc. (WMT) October 22, 2021 $143 Calls (WMT211022C00143000) for no more than $0.30. Set your profit target for $0.60.
I ultimately ended up scaling out of this trade in two pieces on Monday, selling around $0.45 and $0.47.
As I told my subscribers, “On short-term trades – especially when I’ve already scored a profit – I don’t tend to mess around with holding too long.”
That’s because time decay can kick in fast on these super short-term weeklies – so when I’m up 50% or more on a trade, you’re likely to see me locking in those gains.
While you’ll never catch me kicking myself for taking profits, I’ve gotta say – traders who held those cheap WMT calls overnight got a NICE surprise when the stock scored a bullish analyst note on Tuesday morning…
…and not just any old upgrade, either. None other than Goldman Sachs added WMT to its Conviction Buy list – effectively the Everest of bullish brokerage recommendations:
Headline via SeekingAlpha.com, Oct. 19, 2021
In response to the high-profile nod, WMT – a stock that typically doesn’t generate a ton of excitement, to be honest – rallied right out of the gate on Tuesday.
And as a result, the options that hit my scanner exploded in value from around $0.30 on Monday to over $2.00 each early on Tuesday… and my Project 303 members who followed their own trade plans and held the weekly WMT calls overnight had serious reason to celebrate:
Awesome trading, team!
So whether WMT got played as a day trade or an “overnighter,” these calls ended up being a Walmart-worthy bargain, straight off the PennySpike scanner.
Access to “tomorrow’s newspaper” – and me
So how do you stop chasing the news and start getting ahead?
Join me in Project 303 – where I break down the top options plays hitting my scanner each morning, during my favorite time of day to trade.
Learn how I spot actionable scanner signals, the key indicators I’m watching that tip me off to big-money trades, and the trading techniques I use to help maximize my profits and limit losses.
The next WMT could hit my scanner any minute – don’t miss it.
Trade safe out there – I’ll be back with more soon.