I received a tip from my friend Lance Ippolito recently.
He’s an ex-hedge fund trader that specializes in making large amounts of money in a short period of time. He’s aggressive, to put it mildly.
Lace won’t get out of bed unless he can make 2x… 3x… even 5x on his money. So if he has a tip, my ears perk up.
Lance’s plays usually focus on emerging markets (like the cannabis sector), trading binary events like earnings announcements and even what he detects by “spying” on Wall St. (I’ll show you what I mean in a second). He’s the best I’ve ever seen at it…
I’m going to tell you exactly what he told me. But more importantly, I’m going to show you how he uncovered it. Trust me, that’s infinitely more valuable information.
His tip has to do with cybersecurity firm FireEye (FEYE). The company might sound familiar if you’ve been trading for a while. It was a Wall St. darling and, in its glory days, one of the the best IPOs ever.
The last few years have been rough for FEYE. And while most long-term investors have probably forgotten about this company, it’s still a favorite among traders because of how volatile it is. You’ll see how volatile when I zoom-in on an intraday chart.
A few days ago, Lance broke down why he’s bullish on FEYE in a video.
He had already doubled his money on the name after shares gapped up on rumors that it might be bought out. But Lance doesn’t trade on rumor, of course.
He got confirmation that there might be something to the rumor by “spying” on Wall St. Not in the traditional (or illegal) sense, but by using a special software that lets him see what large institutional investors — and even company insiders — are doing with their money.
Someone… or some people… were buying massive amounts of FEYE October $14 calls. Here, see for yourself:
2,202 contracts at $0.25… 1,188 at $0.19… 1,350 at $0.63… 1,768 at $0.28 and on it went.
If you were at a bar with your buddy, and they told you they made these trades, you might call them an idiot.
These were extremely long-shot bets. FEYE was trading below $14 when these transactions happened. So if shares didn’t pop above that level, the contracts would have expired totally worthless.
1,350 calls at $0.63? That would be $85k down the drain if shares didn’t move higher. 1,036 contracts on the October 25 $14 calls at $1.14… you better pray the stock explodes up or you’re down $118k. Unless…
When that type of money flows into ‘absurd’ bets… there’s usually more to it. Things tend to work out for the whales in the market. It’s almost as if they know something retail traders don’t.
But that wasn’t the only thing going for the setup. FEYE has a sky-high short interest.
All short interest means is that traders hope shares will move lower. They do that by selling the stock (without actually owning it) thinking they can buy it back at a lower price later. So at some point the shares have to be bought to lock-in a profit or cut losses.
In the case of FEYE, 20.5 million shares were short. That’s a ton. To put that in context, only 3.6 million shares of FEYE exchange hands on any given day. It would take five days of trading volume to simply buy back the shares that were short. Again, that’s mucho.
Guess what happens if FEYE starts moving higher? Traders that shorted the stock lose money, so they buy back the shares to cut losses… that causes shares to move even higher. More short traders panic — their position is now down quite a bit and they have to stop the bleeding — so they buy shares in mass, and you get what is called a short squeeze.
Those two factors, plus technical analysis, was more than enough for Lance to jump into the trade. He’s seen this before. He picked up some FEYE October $14 call for $0.29.
Given the title of this article, I’m sure you know how this ends. Still, check it out:
He nailed it. Not only did get in before the massive gap up — which even caused shares to halt trading — but he was able to get in on the second move higher.
And those options he bought for $0.29? He sold some on Friday for $1.23 (he’s hasn’t sold all of them). And they’re still trading for over $1.
Lance made a massive 324% gain in just a few days. I wasn’t kidding when I said he looks to double his money and then some.
I’ll be sure to give you a heads up next time Lance finds something ‘unusual’. In the meantime, you can learn more about Lance here.
The free training is all about his favorite cannabis play. But as I just showed you, Lance knows plenty of other ways to make money.
Check it out, and you’ll get his favorite pot stock play AND an inside look at the mind of one of the best traders you’ll ever encounter.
I promise, your ears will perk up too next time he sends you an email.