Issue 101: Member Spotlight - Another Win for Wall Street Wiretapper - Masters in Trading Digest

Member Spotlight - Another Win for Wall Street Wiretapper

I want to introduce you to my friend, Tony. He was kind enough to share his latest trade with our Options Trading community. When we do these member highlights, it’s fun to go back and see how long these traders have been working with the team at Masters in Trading.

Tony joined the Wall Street Wiretapper Options Membership on October 29th, 2020.  After just three months, Tony joined the coaching program, and he’s been a student and active member of our community ever since.

Let’s go over the trade. Below is the full post that Tony shared in our Discord community.

Let’s breakdown the comments, starting with the first line:

“$WRBY was on the Super Unusual on Aug 9th”

The super unusual scans in the Wall Street Wiretapper options scanner are the scans that we deem to be “most unusual.”  We jokingly call this the “Unusual Options Activity on Steroids” list.

Warby Parker, using all the options data available since its IPO, has only been on the most strict unusual options activity scan three times, and 2 of those days were the days of Tony’s trade.

Doesn’t this behavior seem unusual to you?

“The Vol Viz was at the top of its range and the statistics show that WRBY closes in the expected move only 55% of the time.”

What Tony says next is the most important point, in my opinion.

“…showing the market does not know how to price WRBY.”

The chart above shows the Volatility Visualizer Charting Tool for Thinkorswim. The upper and lower bands are the “expected move” for WRBY. This stock has only closed within its “expected move” 55% of the time since its IPO.  

When a stock closes within its expected move 55% of the time, that’s a sign that market makers do not know where to value the options. Anything under 65% is low, and 55% is exceptional.

“Aug 9th WRBY Options Volume 1763% Over 20d average”

Those are some big options orders, wouldn’t you agree?

That’s 1700% more than the average, and then on Aug 8th, there was 2500% more options volume than the 20d average.

When you add up these reasons for the WRBY trade, it should be no surprise that Tony was able to buy the September 17.5 strike calls for $.50, and he’s already been able to sell half his position for $1.40; giving him what is now a free trade.

Here’s the math.

  1. Buy 10 Options for $.50 = $500
  2. Sell 5 Options for $1.40 = $700

Now he gets to hold his five options from the $17.5 strike for the next 36 days with no risk.  

Heck of a trade, Tony!  Congratulations, and thank you for sharing.

Masters in Trading Digest - Issue 101

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The next issue will be released on Monday. 

Until then, trade smart and always manage your tail risk.

Thanks for reading,
Jonathan Rose

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