Today, millions of traders stared at the same screen and waited for 2 p.m.
The Fed held rates steady, two officials voted for a hike, and Wall Street spent the afternoon arguing over what one word in the statement meant for December.
It was loud, and it was close to worthless for finding an edge, because everybody got the news at the exact same second.
The real edge shows up before the news.
When somebody knows a deal or a contract is coming, they have to place their bet out in the open, on a public tape anyone can read.
Read those bets right, and the payoff can be huge. When somebody piled $380,000 into a sleepy pipeline stock this spring, I followed and made 350% in a matter of days.
By the time you finish this email, you’ll know where those bets show up and the 30-second check I use to tell whether one is real money.
Keep Reading
“Isn’t That Insider Trading?”
It’s a fair question.
If you trade on secret information, you’re breaking the law. Reading the tape is something else. You’re looking at public trade data that every exchange reports, and you never learn the secret. You only see the bet.
You won’t know who placed it or why. You’ll see the stock, the strike price (the price the bet needs the stock to reach), the expiration date and how much money went in.
That’s enough. When somebody spends hundreds of thousands of dollars betting a stock will make a specific move by a specific date, the bet tells you a lot.
How To Tell If It’s New Money
A big trade isn’t always a fresh bet. Sometimes a fund is closing an old position, and following it would put you into a trade the smart money is getting out of.
So I check one number the next morning, called open interest. It’s the total count of option contracts still open on that strike and date, and it updates once a day.
If somebody bought 5,000 contracts yesterday and open interest jumped by about 5,000 overnight, that’s a new position. If open interest barely moved, the trade was most likely somebody closing out.
It takes about 30 seconds, and it filters out a lot of noise.
Tonight At 7 P.M. ET
If a December hike is coming, the whole market will hear about it at the same second, just like today. Almost everything else shows up on the tape first.
I’m hosting a private training tonight to show you the rest of how I work:
- The newsfeed I built to flag these bets the moment they print
- How I turned $21 calls into $65 overnight on a stock I knew nothing about
- The two stocks on my radar for a big move in the next five days or less
===>Show Me Tonight At 7 P.M. ET
Your only option,
Mark Sebastian
P.S. I had no idea Ford was about to announce a new battery-storage business. The bet on the tape told me something was coming, and the stock posted its biggest one-day surge in six years. Tonight, I’ll show you the two stocks with the same kind of setup right now. Grab your seat for 7 p.m. ET.