Catch 2X moves on dirt-cheap options!
I hope you caught Thursday’s newsletter because once again, we knocked it out of the park with two earnings plays!
That’s not to say every play we cover here is a big winner — not by a long shot. But we do manage to bring attention to juicy plays worth considering each day, or a lesson on why a particular trade may not be worth a look.
But we also manage to produce some massive wins…
And yesterday, we had both — juicy plays worth considering, and a lesson on trades not worth considering. Let’s review…
We covered Robinhood (HOOD) and Cisco (CSCO) for earnings after the close on Wednesday. And we had this to say about HOOD:
So the second order is much more interesting. It’s in the weekly $56 strike calls, and a cool $900k in premium.
Now, these are also on the pricey side since they’re right at the money. And with market makers expecting a move of $6.74 higher or lower, one could reasonably move a few bucks higher to lower the cost.
Those $59 strike calls, which were $3 higher than the underlying stock price at the time, went from $2.41 when the newsletter hit your inbox to…
$6.70 this morning — BANG!
And then we had this to say about CSCO in regard to bulls hitting the $64, $65 and $66 strike calls with shares trading just above $62 yesterday:
Market makers expect a move of $3.26 higher or lower, so if one’s feeling bullish on Cisco for earnings, we’d definitely stick closer to the $62 strike — the monthly $63 calls are about $1.35 this afternoon, and that’s pretty close to the sweet spot of $1.00 that we love so much.
The $63 calls we pointed out went from $1.46 by the time it hit your inbox before peaking at $2.52 this morning — before selling off big time.
This is exactly why you want to buy inside the market marker’s expected move, and get as close to the money as possible. Those $64 calls also would have paid this morning but less than the $63s, the $65 calls would have been a tiny win, and the $66 calls?
BUST. In fact, they’re going for a measly 12 cents this afternoon.
This is why we always warn readers that a trade can and will go to $0 if wrong — or the stock doesn’t move enough.
This is a crucial lesson to learn about trading short-dated options, especially for beginners!
So what are we looking at for today?
Let’s start with Unity Software (U), which reports earnings on Feb. 20. We saw two orders and once again, one we won’t really consider because it’s too long-dated. BUT, both orders we saw capture earnings, and the second order is in the February monthly expiration, $21 strike calls with shares trading at $20.50 today.
While we don’t like trading the long-dated stuff, it does help reinforce our confidence in an order when we see more than one in the same ticker, and across both scanners!
It’s also a Roaring Kitty favorite, which means a simple tweet from him can send the stock shooting higher — and our calls along with it!
And second, it’s not an earnings play — most of the stocks reporting today are on the pricey side — but we are seeing an avalanche of bullish flow into Intel (INTC).
The stock is up 8.3% this afternoon so remember the rules…
Don’t chase! Buy dips and sell rips!
And always, ALWAYS respect that risk!
Order Flow:
*This is for informational and educational purposes only. These are not official alerts issued by Lance, but rather some interesting orders picked by the team at Lance Ippolito Trading.
There is inherent risk in trading. Trade at your own risk.
Note: If no date is listed after the month, it’s the monthly expiration (third Friday).
The team at Lance Ippolito Trading
Lance doesn’t want the CCP spying on him, so you’ll never find him on TikTok. Same goes for other social media sites, which are filled with impersonators, scammers and crypto bros.
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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