Kyle Dennis has recently discovered an options strategy that:
- Increases your probability of success
- Eliminates the guesswork on what to trade
- As well as, pinpoints when a stock is about to make an explosive move
I know… I know… it almost sounds too good to be true, but Kyle’s newest service, Dollar Ace, delivers on all those fronts and more.
In fact, the service just launched yesterday, but it didn’t take long for Kyle to knock down his first triple-digit winner.
And while most stocks were in the red (thanks to the uncertainty surrounding the China trade war), Kyle was confidently buying calls on select stocks– like YELP— which doubled in value by the afternoon.
So naturally, I had to sit down with him to see what his new strategy is all about. You can check out the transcript below:
Jeff Bishop (JB): Congrats on the launch of the new service, there is always pressure to deliver right away and show your clients performance. A triple-digit winner on day one must feel nice. But before we get into your big trade yesterday, can you briefly explain the strategy?
Kyle Dennis (KD): Thanks Jeff, and yes, we’re off to an awesome start, but these are the type of results you can expect when you trade off unusual options activity. You see, the stock market is dominated by investment banks, hedge funds, pensions, mutual funds, ultra-wealthy financiers, and sovereign wealth funds. They control large sums of money and love using options to express their views because it awards them powerful leverage and limits their downside. I’m using a proprietary options scanner that helps me detect their moves in real-time, and take advantage of the same opportunities.
JB: I remember back in 2012, Carl Icahn used options to take a stake in Netflix that made him over $2B in trading profits. Are these the type of plays your scanner is on the hunt for?
KD: Exactly Jeff…It’s no secret that Wall Street firms have access to the best research, analysts, and tools out there. And whenever they place an options trade, they are legally obligated to report it. My scanner picks up on large option block trades, and allows me to piggyback off their plays.
JB: So it’s like ethically stealing Wall Street’s best ideas. I like it. Tell me more.
KD: Sure. Let me use yesterday’s YELP trade as an example. So on an average, YELP will trade around 6,400 option contracts per day. However, on Tuesday, over 35,000 contracts were traded. Specifically, 33,000 of those contracts were calls, most of those options were out-of-the-money and expiring this Friday.
JB: Wow! They either hate money or they know something.
KD: I’ll take the latter. You see, when you’re trading thousands of contracts, you need to place those trades with a floor broker. And if you’re a player, like the “insiders” I follow, money is not a factor. These guys have enough capital to buy stock, in-the-money options, or anything else they desire. So when they are aggressively buying “long-shot bets” I want to follow them too. And that’s what my Dollar Ace strategy is all about– finding cheap options (priced at $1 or less) that are poised to take off fast.
JB: So 33,000 call options of YELP traded yesterday that are set to expire worthless this Friday?
KD: Yes. And what made it so interesting is that there were no earnings or any other known catalyst. It’s like someone knew something! That said, if those “insiders” were long the calls, the person on the other side (probably the market makers) were short the calls. In other words, the market makers were forced to buy stock to hedge their short calls. This, in turn, created a snowball effect that lifted the stock price higher. And while most stocks were red yesterday, YELP ended up 4% higher (and those options increased by 100% within a few hours)!
JB: So the options activity pushed the underlying stock higher?
KD: Yes. It’s like a self-fulfilling prophecy.
JB: Now, I understand you’re using a proprietary scanner to find these “insider trades”. Without giving me your secret sauce, can you tell me how you’re finding these plays?
KD: Sure. The big tell in YELP was that the options were out-of-the-money and short-dated. In other words, these “insiders” needed the stock to move right away because the time premium evaporates as an option approaches expiration. And here’s another thing, the call buying in YELP was aggressive! Instead of working to get the best prices on the order like a smart trader, these “insiders” were paying the offer to get the contracts quickly. Of course, there are other nuances too which I talk about in my video.
JB: That’s great. How often do you spot these types of trades?
KD: Since there are thousands of option block trades per day. It’s not uncommon to find 1-4 “insider trades.” Of course, not every trade will work. But as you know Jeff, one or two monster winners can wipe away a lot of losers. The key is to always position yourself with the smart money.
JB: My option ideas are often generated from my money pattern. But you are saying that I don’t have to be an expert on reading charts to have success with your Dollar Ace strategy.
KD: Exactly Jeff. All the hard work– the research and analysis have been done. Heck, these “insiders” pinpoint through their option trades when a stock is expected to have an explosive move. It’s great for traders who are struggling to generate their own trade ideas because this takes all the guesswork out of trading.
JB: Great stuff, Kyle. I wish you great success with the strategy. And one last question, where can my readers find out more about your service and how can they join if interested?
KD: Thanks, Jeff. I recently put a video together with more detail on this strategy. You can watch it on my website. And for those interested, you can join here to take advantage of the biggest breakthrough in options trading right now.