How to follow momentum traders with options and Unusual Whales
As part of our free weekly educational series
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Hey all,
This is the Unusual Whales Team, and we are going to spend every Wednesday walking you through some trades of the week for free to help your trading!
In today’s issue, we’re going to cover some momentum traders from this week who capitalized on the uptrend at a good time. The trader managed to make a same-day trade for significant profits. We’ll demonstrate in this issue how to see trades like these, how to spot when a position may have been exited intraday, and how to confirm that hypothesis the next morning!
The trade we’ll be covering today occurred on April 11th, 2024. During the morning, Apple $AAPL was trading between $167 per share and $168 per share. Around 10:30am Central Time, $AAPL began trending up. This break through the upside of the chop is where our trader’s story begins.
As $AAPL broke through the wall at $169, we noted significant activity on the $185 Call contract for 5/3/2024.
While $AAPL traded at $171.09 per share, 1,000 contracts of the $185 C 05/03/2024 transacted at once, for an average price of $0.65 per contract, catching the breakout as $AAPL pushed through $69 per share. Shortly after, the position continued building with another 500 contracts hitting the tape at an average fill of $0.69. As $AAPL continued trending higher, contracts kept coming in.
Between 12:13 and 12:26pm Central, another 916 contracts came in at fills ranging from $0.65 to $0.77 per contract. By 1:00pm Central, this position had grown to well over 2,200 contracts. All the while, $AAPL continued to trend up.
Above, we can see where the position began building, and where it grew, all within a short 20 minute timespan. It’s clear both from the timing of the contract, and on the chart above, that this position was instantly profitable. And you can see that $AAPL certainly didn’t stop rising all the way through the end of the session.
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Back to the trade, at around 2:30pm Central Time, we noted two large transactions on the contract at the BID side.
This transaction brought the total daily volume up to over 7,000. However, remember, we saw positions building on the ASK side all afternoon up until this point. The first transaction here contained over 1,000 contracts, at the bid, for an average fill of $1.30 per contract while $AAPL traded at $174.78
Now, it is possible that this BID SIDE activity was a new position wherein someone shorted, or sold to open, those contracts. However, given the context of that afternoon, it seemed more likely that this was the prior volume being closed out. How can we know for sure? Look at the Volume and Open Interest. Even though a total of 7,517 contracts transacted on April 11th, only 1,689 contracts stayed open into the next day. This shows us that not all of the volume on the 11th was new positioning. This is a day trade, in-and-out.
This trader exited their position around 2:30 to 2:35pm on the same day they opened their position. From their initial average entry of $0.69 per contract while $AAPL traded at $171.09, they closed the position at $1.30 per contract. This netted our trader a profit of +88.4% in just a few short hours, and stands as a prime example of a successful intraday momentum trade.
Thank you as always for reading! I hope this article helps you understand how to speculate on options flow that suggests an intraday trade! Be on the lookout for more guides, walkthroughs, and Education on the Unusual Whales YouTube channel!
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NOTE: This post is not financial advice. The stock market is risky, and any trade or investment is expected to have some, or total, loss. Please do research before any trade. Do not use this information for investment decisions. Check terms on site for full terms. Agree to terms before considering this information.