Happy Friday, traders…

What a week. Huge down days. Near record-high green days. Insane price action across the board.

Many traders are nervous to trade in this environment. I get it, there’s nothing simple or straightforward about this market.

That said, rough markets can build traders into true masters of their craft. 

Moreover, general volatility can bring about some of the greatest trading opportunities in history — if you know how to approach them.

No one knows this better than Smart Money traders. Every time there’s a bear market, recession, or volatility event — they come out on top.

It’s a tale as old as time: The Smart Money wins while the rest of the market stumbles. 

We saw a perfect example of this on Wednesday. Just hours before President Trump made his shocking “tariff pause” announcement, certain traders began placing unusually large bets on short-term bullish positions.

Specifically, they were buying 0DTE (zero days to expiration) call options on the SPDR S&P 500 ETF Trust (NYSEARCA: SPY).

That was an early hint that institutional players knew something was about to happen. 

Hours later, those calls were up more than 2,000%, up to 22,500% on the day:

A single trader placed a bet of $260,000 on these high-risk 0DTE SPY calls just 15 minutes before the news hit…

By the time the market closed, that position was worth roughly $5 million.

You read that right. A four-hour trade that ballooned into an eight-figure windfall.

Clearly, it’s not impossible to trade this market. You just have to know where to look for clues…

With that in mind, let me show you four of the greatest Smart Money trades made during bear markets (and what you can learn from them)…

1992: George Soros and Stanley Druckenmiller “Break the Bank of England”

In 1992, George Soros saw a setup forming that no one else did…

Along with a young Stanley Druckenmiller, he set his sights on the British pound, predicting its decline.

Soros didn’t just sell the pound; he aggressively bet against it by shorting the currency. 

To further amplify his gains, Soros also used put options so that he could eventually sell the pound at a predetermined price. 

His prediction proved correct when the British government, unable to maintain the pound’s value, devalued it. 

This dramatic event, now known as “Black Wednesday,” resulted in Soros making an estimated $1 billion, showing the world the immense power of optionable currency trading.

Lesson for Traders: Soros and Druckenmiller’s success came from having a deep understanding of macroeconomics — and being willing to go against the crowd. 

When you believe strongly in a thesis — like they did with the devaluation of the British pound —  having the courage to take a substantial position can lead to significant profits. 

This story also illustrates the power of options to amplify returns, particularly in bearish environments. 

2008: Andrew Hall’s Crude Oil Trade

As the global economy was crumbling in 2008, a lesser-known trader named Andrew Hall made one of the boldest oil trades in history. 

Hall — a commodities trader at Citigroup — bet that crude oil prices would hit $100 per barrel by the end of the year.

His managers thought he was crazy as he loaded up call options on crude oil futures. 

But Hall’s belief in rising crude prices wasn’t just based on a gut feeling — he had a deep understanding of global oil markets, supply constraints, and geopolitical tensions…

And sure enough, by mid-2008, oil did surpass $100 a barrel (peaking near $147). 

Hall’s foresight earned him around $100 million personally (and even more for his firm) — as well as the moniker of “The Oil King.”

Lesson for Traders: Hall’s trade shows the importance of understanding broader market forces (like supply and demand) and how they affect commodity prices. 

Additionally, this trade is a perfect example of how larger macroeconomic factors can lead to some of the biggest moves in the markets. 

Hall’s ability to see the forest through the trees (and remain patient in a volatile market) made him a fortune. 

2017: Seth Klarman’s Puerto Rico Bonds Bet

In 2017, Puerto Rican bonds collapsed in value after Hurricane Maria devastated the island. 

Meanwhile, Seth Klarman’s Baupost Group made a calculated options trade on Puerto Rico’s distressed bonds. 

While most traders were scrambling, Klarman saw a “fat pitch” coming right toward the middle of his bat…

Klarman began buying up deeply discounted bond options, betting that Puerto Rico would eventually restructure its debt and recover.

Sure enough, when the restructuring plan was finalized in 2021, Baupost reportedly made hundreds of millions of dollars.

Lesson for Traders: Klarman’s play illustrates how factors completely unrelated to finance (in this case, even the weather) can influence enormous shifts in asset prices. 

Additionally, this trade underscores the power of contrarian trading (i.e., the ability to spot distressed opportunities that others overlook).

When markets panic, the Smart Money looks for mispriced assets, using options to help them control large positions with defined risk.

2020: Bill Ackman’s $2.3 Billion COVID-19 Hedge

In 2020, Bill Ackman made headlines with a hedge against market downturns due to the potential impacts of the COVID-19 pandemic. 

Ackman’s Pershing Square Capital Management spent $27 million on credit protection for its portfolio.

Then, Ackman made an infamous CNBC appearance, where he told traders and investors that “Hell is coming” and suggested that “[Hilton], along with every other hotel company, is going to zero.”

Unsurprisingly, this interview didn’t go over so well with the markets … but worked out beautifully for Ackman’s portfolio.

As markets tanked in March 2020, Ackman’s hedge nearly 10x’d into a profit of $2.6 billion.

While his news appearance was controversial, there’s no arguing that Ackman was right to hedge his massive portfolio as soon as COVID-19 became a reality.

Lesson for Traders: Ackman’s hedge against COVID-19 was a masterclass in anticipating macroeconomic risks and acting preemptively. 

This trade teaches the importance of hedging when you foresee potential downturns that could affect your broader portfolio. 

For individual traders, this means understanding how to protect against adverse movements using strategies like buying puts or inverse ETFs. 

It also highlights the value of being adaptable — Ackman’s shift from bearish to bullish, buying beaten-down stocks post-crash, shows the importance of flexibility in strategy as market conditions evolve.

Why I Follow the Smart Money

The concept behind these trades is the foundational principle of my trading strategy:

The Smart Money moves before the chart does. 

That’s why I start every morning by checking my OMEN Scanner. 

I can see exactly where these guys are placing their bets, check the charts to see if they look good, and then decide if I want to act.

But recently, I’ve been developing another aspect of my strategy…

…Working on a brand-new tool, a proprietary indicator that has the potential to deliver outsized gains that even my Omen Scanner won’t catch…

And I’m even giving away a FREE TRADE IDEA using this tool that could surge over the next seven days.

Click here to see my final warning … before it’s too late.

Happy trading,

Ben Sturgill

*Past performance does not indicate future results