Is it happening again? Is the Reddit trade going to dominate the markets for a 4th time?
When GME popped onto the scene last January, markets went crazy. Traders and investors looked for similarly leveraged setups, and while a handful worked, many also did not.
Then there was the second move that we saw with GME rallying from about $45 to about $350 from February 23rd to March 10th. And then, in June, the trade seemed to be coming through again, with GME rallying nearly 100% from May 24th until June 8th.
These types of moves seem to be getting smaller each time than the move from $17.25 on January 4th to the high of $428 on January 28th, but the key here is the amount of time these moves tend to last. And if today is the start, then we have just a couple of weeks to try to capitalize on GME or another trade that historically trades along with GME.
So, let’s look at the chart of GME for the last 9 months and see what we can figure out from yesterday’s $45+ move:
Given the historical moves, I wouldn’t necessarily bet on much more than another $100. That’s a lot of movement in this stock, obviously, but the markets are already trying to price that in as much as they can, with the straddle for September 17th trading around $65, and thus the upside to buying options in GME seems fairly limited.
So where do we find the leverage? Is it in AMC? Is it in NOK? Is it in BBBY? The list goes on and on for the Reddit trades. For me, I decided to try out ATOS. And there are 2 reasons. ATOS is a small biotech company, and small biotech companies got a very nice boost with Monday’s takeover announcement of Trillium Therapeutics (TRIL) by Pfizer, and you can see why this got people excited when you look at the price action for Trillium and the premium paid:
My mind immediately went into overdrive trying to find biotech companies with upside. Once I saw the move in GME, it became clear that I wanted a biotech company that could trade upwards thanks to either TRIL or thanks to GME, and if implied volatility was near recent lows, that’s even better. And that led me to ATOS. Here’s the chart:
While Atossa did not participate in the February/March rally of GME, it had an impressive rally from May 28th until June 25th.
Now, any biotech always has increased risk of major movement due to fundamental inputs on their drugs, and that’s particularly true for the small caps. But with ATOS holding above the 200-Day Moving Average, finding support thanks to both TRIL and GME, and having incredibly cheap options leverage relative to recent history, the odds should certainly be in my favor.
Since this is an open position, I can’t give the full specifics, but I’m happy to discuss trade setups in the current market environment if you contact me at my e-mail below.
Please also take this chance to review how I apply technical signals to my options trades at https://optionhotline.com and if you have any questions, never hesitate to reach out.
PS–Check out the Market Wealth Daily site for more trade ideas and potentially profitable tips. www.marketwealthdaily.com
Auto-trading, or any broker or advisor-directed type of trading, is not supported or endorsed by TradeWins. For additional information on auto-trading, you may visit the SEC’s website: All About Auto-Trading, https://www.sec.gov/
TradeWins does not recommend or refer subscribers to broker-dealers. You should perform your own due diligence with respect to satisfactory broker-dealers and whether to open a brokerage account. You should always consult with your own professional advisers regarding equities and options on equities trading.
1. The information provided by the newsletters, trading, training and educational products related to various markets (collectively referred to as the “Services”) is not customized or personalized to any particular risk profile or tolerance. Nor is the information published by TradeWins Publishing (“TradeWins”) a customized or personalized recommendation to buy, sell, hold, or invest in particular financial products. The Services are intended to supplement your own research and analysis.
2. TradeWins’ Services are not a solicitation or offer to buy or sell any financial products, and the Services are not intended to provide money management advice or services.
3. Past performance is not necessarily indicative of future results. Trading and investing involve substantial risk. Trading on margin carries a high level of risk, and may not be suitable for all investors. Other than the refund policy detailed elsewhere, TradeWins does not make any guarantee or other promise as to any results that may be obtained from using the Services. No person subscribing for the Services (“Subscriber”) should make any investment decision without first consulting his or her own personal financial adviser, broker or consultant. TradeWins disclaims any and all liability in the event anything contained in the Services proves to be inaccurate, incomplete or unreliable, or results in any investment or other loss by a Subscriber.
4. You should trade or invest only “risk capital” money you can afford to lose. Trading stocks and stock options involves high risk and you can lose the entire principal amount invested or more.
5. All investments carry risk and all trading decisions made by a person remain the responsibility of that person. There is no guarantee that systems, indicators, or trading signals will result in profits or that they will not produce losses. Subscribers should fully understand all risks associated with any kind of trading or investing before engaging in such activities.
6. Some profit examples are based on hypothetical or simulated trading. This means the trades are not actual trades and instead are hypothetical trades based on real market prices at the time the recommendation is disseminated. No actual money is invested, nor are any trades executed. Hypothetical or simulated performance is not necessarily indicative of future results. Hypothetical performance results have many inherent limitations, some of which are described below. Also, the hypothetical results do not include the costs of subscriptions, commissions, or other fees. Because the trades underlying these examples have not actually been executed, the results may understate or overstate the impact of certain market factors, such as lack of liquidity. Simulated trading services in general are also designed with the benefit of hindsight, which may not be relevant to actual trading. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. TradeWins makes no representations or warranties that any account will or is likely to achieve profits similar to those shown.
7. No representation is being made that you will achieve profits or the same results as any person providing testimonial. No representation is being made that any person providing a testimonial is likely to continue to experience profitable trading after the date on which the testimonial was provided, and in fact the person providing the testimonial may have experienced losses.
8. The author experiences are not typical. The author is an experienced investor and your results will vary depending on risk tolerance, amount of risk capital utilized, size of trading position and other factors. Certain Subscribers may modify the author methods, or modify or ignore the rules or risk parameters, and any such actions are taken entirely at the Subscriber’s own election and for the Subscriber’s own risk.