Normally in Unusual Options Activity, I give you a few different ideas based on the activity my scanner picked up the previous week.
But this week is different.
You see, one stock stood out on my scanner last week above all others — Uber Technologies (UBER).
And it’s for a reason I don’t usually talk about in these essays, but that I’m almost always using in the background to confirm my suspicions…
A Special Unusual Options Trade
The ride-sharing company has fallen about a third since the peak in February.
That’s happening even as people are getting out of the house and looking for more rides to events and for traveling. Things that should be great for Uber’s business.
But, investors seem to believe the stock went too high, too fast.
But then last week, we saw millions pouring into the stock via unusual options activity.
Uber kept coming up on the unusual options activity, but it was just a few trades that really stood out…
$1.9 million on 5,754 contracts of the February $47.50 call option for $3.34. Another $2.3 million on 7,320 contracts of the February $47.50 calls for $3.20. Then $3.4 million on 13,595 contracts of the February $50 call option for $2.48.
All told, over $7.5 million was plowed into Uber calls last week. They’re all expiring in February, signaling this trader expects a major trend change for UBER stock to last for the next few months.
There was even more unusual options activity on the stock, including another million-dollar bullish bet, but these three trades were the largest.
All this activity should be enough to put the stock on your radar. We are seeing other traders wager heavy amounts. And the fact they’re willing to buy some time, out three months, shows this trade is expected to play out slowly and steadily. Not an overnight miracle.
That’s all great news for Uber stock. But there’s one more piece of evidence that has me extremely confident on this trade…
Let’s take a deeper look using my Profit Radar.
If you’ve been following along, you know the Profit Radar is my unique version of the Relative Rotation Graph. It identifies key momentum shifts in the market, which I’ll explain in just a moment.
But what you need to know now is this Profit Radar can give us an idea of where Uber is in the market right now, and where it’s headed.
And, well, just take a look:
(Click here to view larger image.)
On this graph, we look for momentum shifts. You can see that Uber just shifted from lagging the market (the red quadrant), to improving (the blue quadrant).
What tends to come next is the stock moves into leading (green), before it weakens again (yellow) and ends up lagging and starting all over.
Keep in mind, this is a daily chart. Patterns on daily charts tend to play out in a few days to a few weeks. So this isn’t telling us what to expect over the next few months. Rather, it provides evidence that Uber is in position to race higher in the coming days.
Right now, Uber is in a sweet spot on the Profit Radar that I love to see stocks in, especially in the short term. The bullish signal of entering the improving quadrant is what I like to call the Fast Lane. These stocks are on the cusp of making big moves in the market.
But what’s even better is, if you add another filter to my Profit Radar, you can find even greater opportunities.
How I Found the Stock Market’s Fast Lane
Earlier this year, I set a goal to find the Fast Lane of the stock market.
You see, the stock market is like a gigantic superhighway. Every stock is a car, and during rush hour, most are stuck in traffic.
But there’s always a Fast Lane on this highway. And in that lane, there’s always one car that’s faster than all the others.
I knew there had to be a way to identify these setups consistently. And after spending most of 2021 working on this new Profit Radar pattern, I’ve finally cracked the code.
Now that I know what to look for, I can spot multiple opportunities, just like the one on Uber, every single day.
But even this is nothing compared to my total Fast Lane approach…
That’s where we spot the fastest-moving index in the market, out of the five top indexes. Then take a deeper dive to find the single best stock to trade over the next few days.
And when you see it play out, it works like magic.
Finding the fastest index, and the fastest stock within it, is what can deliver potential triple-digit gains in a matter of days. And that’s what my Fast Lane Profits research service is all about.
I’m mentioning this because we’re right about to open it up to the public for the first time.
But space is limited. So be sure to click here and sign up so you won’t miss out.
Chad Shoop, CMT
Editor, Quick Hit Profits
Chart of the Day:
Stocks Are Back on Trend
(Click here to view larger image.)
The S&P 500 has been toying with us lately.
A big break below the long-term, pandemic-bounce trend in September. A fake out back above the trendline later that month.
Then a reclaim of the trend at the start of November. And last week, another drop below the trend… making the early November reclaim look like another potential fake out.
The blue MACD signal line also looks ready to cross below the orange line, a bearish cross…
But this morning, stocks are up big. We’re set to open back above the trendline, just a few points shy of a new all-time high.
It’s too early to tell if this bounce sticks. And we are perilously close to making that bearish cross on the MACD.
So long as today’s gains hold, I think the smarter bet is to stay bullish, but cautious on stocks through the end of the year. The market looks fragile.
Managing Editor, True Options Masters