The “AHA” Moment - No More Selling

Trade Idea Shared April 04, 2022.

• Consider Buying $55 strike puts for $1.55 ($155 Risk per 1x)

We shared an idea for members to consider purchasing downside puts in $CALM because our Unusual Options Activity scanner, Wall Street Wiretapper, was flagging down peculiar trading behavior.

You can see the $CALM trades in the image above.  The original hits were from 04/01, and we were fortunate to see continued unusual options trading after the trade was shared; an excellent sign! 

Eloy took the $CALM trade, and also shared a chart of our Volatility Visualizer tool, an important component in our decision-making process.  

The chart below shares $CALM trading behavior over the last 2 years and also includes the stocks “expected move” for front-month options.

A few important things to note:

1. The 87.5% number circled in green shows the percentage of times $CALM has traded within its expected move, going back 2 years.  Said another way, it's the percentage of times $CALM has traded within its implied volatility.  Implied volatility is the actual volatility priced into an options contract.  A stock staying inside its volatility 87.5% of the time is well priced stock.  One can infer that market makers have a good idea how to price $CALM.
2. This tool allows us to visually see the difference in volatility between months going back 2 years.

The green lines act as resistance, and red lines should act as support.

We like to say in our Discord room, “It’s ok to make a whole bunch of money on one trade.”

So sure, $CALM has traded lower and traders are making great profits but look at the weekly chart above.  It sure seems like $CALM has the chance to continue trading significantly lower.

Great trade, and thank you to those sharing all your kind words.