Here’s an example of how some smart investors profit from looking at options trading activity. Late Friday we saw increased trading in auto loan and insurance company Ally Financial (ALLY). Of note over 2500 January 2018 22 strike calls were purchased for $1.25. Open interest in ALLY was less than 800 contracts, suggesting that this was fresh buying.
Whether or not you understand the last sentence clearly the main takeaway from the ALLY options trading activity was that traders were implementing a BULLISH view on ALLY stock. ALLY reported earnings before the market open this morning and as of this article the stock is up close to 5%.
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How Do Smart Traders Profit From Analyzing ALLY Options Activity?
Well there are 2 ways traders could have made money from the ALLY options activity.
1) Simply purchase shares of ALLY: Traders could have purchased shares in ALLY after recognizing the bullish options activity and profited from the share price increase seen today.
2) Purchase call options in ALLY: There are a number of different call options a trader could have purchased to experience gains on ALLY but instead of going into detail here it’s probably better to check out this video where it is explained in detail.
How Can You Find Stocks (Like ALLY) On The Verge Of Moving Higher?
Part of the problem in finding the right investments is “finding the right investments” in a timely fashion. That’s why we try to highlight significant options trading here to help inform you as to what smart traders are doing and give you ideas for your own trading. In addition we provide a constantly updated, real-time list of the stocks that we see are most poised to move higher (or lower) in the coming days. You can access this must-see trading list here.
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