More Big Money Volume On This Asian E-Commerce Name

Hey Traders,

It may be a low-volume week on the market, but that doesn’t mean there aren’t some unusual volume trades crossing the tape …

In particular, I noted one Big Money move on an Asian e-commerce stock that was of particular interest …

Not only was the size of this trade quite notable given the usual volume in this stock’s pits …

But it also seems to support some Big Money trades I saw before the holidays …

That also happened to be a trade I piggybacked myself.

Since its IPO in late March, Coupang (Ticker: CPNG) spent months slowly winding lower …

But after the extended downtrend, CPNG seems to have found its footing, but so far has failed to launch higher, and instead has more or less churned sideways …

Although the shares may finally be catching a tailwind after bouncing off the $25 mark earlier this month, CPNG continues to struggle to maintain a breakout above the $30.50 mark., closing at $29.52 on Tuesday.

Does Big Money see a breach of this resistance level in the future?

Not exactly … but they are betting on at least some further upside for the Korean e-tailer in the near future.

This trader opened up a ratio diagonal spread, where the trader sold 8,000 contracts of the December 31 30.5-strike calls for $0.21, or $168,000.

He or she then purchased 5,000 contracts of the January 7 30-strike calls for $0.87. While the outright purchase of these calls would have cost $435,000, the credit for the calls sold brings the cost down to $267,000.

This trade indicates a near-term neutral position, with the trader betting that CPNG won’t be able to decisively break above the $30.50 mark into Friday’s expiration.

However, they are betting that CPNG will be able to make a move higher in the week following … and given the breakeven price of this trade, it looks like they think that pesky resistance at $30.50 may finally fall …

That’s a 4% gain in a little over a week … does CPNG have what it takes?

This trade may not be extremely high dollar, but given CPNG’s typical trading volume, it is definitely worth taking a closer look at.

For example, take a look at the current open interest on the at-the-money strikes, compared to the move Big Money just made …

And compare them to the across-the-aisle open interest on the put side … It’s tumbleweeds!

What’s more, this Smart Money trader is getting a bargain in CPNG’s pits, with CPNG’s 30-day implied volatility in just the fifth percentile of its annual range, indicating options are “on sale” right now.

And, even better, CPNG’s 20-day historical volatility – which indicates how much movement CPNG has actually seen over the last trading month – is actually slightly above its 30-day implied volatility:

This indicates CPNG traders are getting more movement than they’re paying for … and they’re not paying for much!

And like I mentioned, this isn’t the first Big Money move the “Amazon of Korea” has seen in the pits lately …

On Tuesday, December 14 we saw another near-term bullish bet on the stock:

This trader purchased 5,000 contracts of the December 27.5-strike calls for $0.65, along with 7,500 contracts of the December 28-strike calls for $0.40! That’s a total outlay of $625,000.

Then on the following Friday, there were several additional more bullish Big Money moves made on the stock …

Which I went over during my live Big Money Flow shows …

And then piggybacked with my Big Money Flow traders, buying up some January-dated 30-strike calls.

Looking at where Big Money is continuing to position itself …

I’m thinking we made an excellent call to follow in Big Money’s footsteps on this one.

Want to catch the next one?

Find out more about how I trade Big Money Flow right here.

Your Only Option,

Mark Sebastian

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