Good morning, traders…

People who trade normal stocks (common shares) only have two choices: long or short.

But when you trade options, you have many more … well, options.

This is a double-edged sword. More options should be a good thing, right?

Sort of. But when people try to trade options for the first time, they’re often overwhelmed by the sheer complexity of the market. 

Strike prices, expiration dates, volume, open interest, delta, gamma … it’s a lot to digest.

On top of all that, there are currently more than 1.5 million active options contracts. 

That’s why I only trade contracts with big Smart Money volume. I want an unfair advantage in the options market. 

What sets big institutional Smart Money apart from retail traders in their Mom’s basement? 

Information.

By following the Smart Money, I can base trades on their insider information without actually having it.

I don’t need to know the material, non-public data that these mysterious traders might be using…

I simply need to know what patterns I’m looking for, pay close attention to my scanner, and enter when the opportunities present themselves.

But even if you narrow your potential ‘options’ down to Smart Money setups, you’re still left with hundreds of thousands of contracts to choose from.

Students always ask me, “Ben, how exactly do you choose the contracts you trade?”

Here’s how you can use my OMEN Scanner to identify five-star trading opportunities before they fully unfold…

Why I Rely On My Scanner

My OMEN Scanner shows you exactly where institutional traders (a.k.a. the Smart Money) are placing their bets. 

These guys aren’t like you and me. They have access to boatloads of money and actionable non-public information, giving them an undeniable edge. 

By paying attention to their trades, you’ll get a sense of where large capital flows are moving, which leaves hints about where individual stocks (and the market at large) may be headed next. 

Here’s what to look for:

• Multiple Buys in a Particular Contract: When you see several large trades (buys) in a specific options contract, it’s a signal that smart money might be expecting a move in that stock. (The more buys you see, the stronger the signal.)
• Check the Chart: Look at the stock chart after you see these buys. Has the chart already “taken off” after these buys? (It’s usually better if the stock hasn’t surged yet because it might mean the big move is still to come.)

Analyzing the Trades

After spotting potential trades on the scanner, the next step is to figure out if smart money traders are still holding their positions (or if they’ve already sold).

You can do this by checking the following liquidity indicators:

1. Open Interest: Open interest tells you how many contracts are still open and not yet closed or exercised. If there is still a lot of open interest in the contract you’re looking at, it’s a good sign that the smart money might still be holding their positions.
2. Options Volume: Options volume tells you how many contracts are trading hands that day. If this number is high — especially above the open interest number — that’s a sign that the ‘smart money’ is still actively buying. 

But why is it important if you see a massive amount of contracts being held (or traded)?

• Reason 1: If they haven’t sold their contracts for a huge profit yet … they’re probably still in the trade, waiting for a bigger move.
• Reason 2: If they’re still holding the contracts, you need to know where they bought in. This helps you set a target for your own entry price.

Planning Your Trade with the Smart Money

If the setup hasn’t made its move yet, you’ll want to decide at what price you’re willing to buy the contracts.

But don’t just jump in because Smart Money is involved. Not all sweeps are created equal. Make sure the trade checks your boxes before entering. 

Look for easily identifiable patterns on the chart, like:

• 3x a Lady: A pattern indicating three separate signals confirming a move.
• Run, Rest, Run: A stock making a move up and then consolidating before the next move higher.
• Breakouts: A stock moving above a resistance level.
• Pullbacks: A brief decline in price after a strong upward move.

You can also use the scanner to prepare for the next trading day by reviewing the largest trades from the previous day…

• Review Yesterday’s Trades: Look at the largest trades on the scanner from the previous day. Ask yourself whether these trades have already played out or not.
• Check If Smart Money is Still In: If the trades haven’t fully worked out, it’s worth checking if the smart money is still in those positions. If they are, the trade might still have potential.
• Analyze the Technical Setup: As always, don’t follow blindly. Check the chart and ensure that the setup aligns with your trading strategy.
• Target Their Entry Point: Find out where the smart money bought in and use that as a guide for your own entry point.

Using Smart Money Data in Live Trading

Let’s go through a quick example to illustrate how this works in practice:

• Morning Scan: You check the OMEN Scanner in the morning and notice several large buys in Apple Inc. (NASDAQ: AAPL) call options.
• Chart Analysis: You pull up the AAPL chart and see that the price hasn’t surged yet. This means the big move might still be coming.
• Open Interest Double-Check: You double-check the open interest and see that it’s still high, indicating that the smart money hasn’t sold its positions yet.
• Set Up Your Trade: You find a technical setup on the chart, like a breakout above a resistance level. You decide to enter the trade if the price reaches a certain point, using the smart money’s entry as your guide.

Finding good day trades is about more than just following scanners blindly. It requires careful analysis and confirmation through technical setups.

Start combining scanner data with solid technical analysis and risk management, and you’ll be finding juicy setups in no time. 

Happy trading,

Ben Sturgill

P.S. You don’t need a fancy setup. 

You don’t need a bunch of “algos” and “indicators.”

You don’t need to spend all day watching charts. 

And you don’t need a lot of money. 

All you need is a working phone, internet connection, and a trading account…

And you could begin targeting gains up to 20%… 39%… 100%… 148%… 200%… and even 300%…*.

Join Aaron Hunziker TOMORROW, June 18 at 10:00 a.m. EST to see how my brand-new day tool can transform your strategy overnight.

*Past performance does not indicate future results