Unlike Jerry Maguire who said SHOW ME THE MONEY, one of the tenets of trading that I believe in is ‘follow the money’. Simply put, the big money makes up 80% or so of the action everyday, so I want to go where the money is flowing. Nobody is going to pick up the phone and call telling me what they are buying, but volume is a great polygraph test. So, when I saw some massive call buying in an AutoDesk strike Friday (noted first by my good friend Tim Collins at Retrowallstreet), I had to investigate it further. Now, for a dollar amount it may not seem like much here but there is a REASON this buyer opened up these contracts right here, right now. I don’t ask questions though, I just follow the footsteps. For the day over 17K contracts traded on this one strike alone!
There had recently been some big option buying in this name over several days. The chart and technicals looked great and ready for a move, but I wasn’t sure the big call buy (Dec 44) was the one for me. I took it in a few strikes, and if this big buyer (10K contracts right on the offer) is right I’ll still make out nicely. So, just after buying you can see the intraday chart below the stock continued to move higher. The full daily bar is robust with great volume all day long, this looks to have more upside.
Following the big money can pay off. I’ll have a chart/technical analysis later in the week on Autodesk .
