I trade Unusual Options Activity (abnormal volume in calls or puts) because more often than not, these trades result in a stock making a major move.
Today we saw a trader buy over 10,000 KWEB December 41 Calls for $.75 debit. This order cost over a $750,000. Each contract entitles the option buyer/owner to buy 100 shares of the underlying stock upon expiration. KWEB has an ADV (Average Daily Volume) of only 2,280,000 shares. This trade has a huge risk and huge reward due to the fact that these Calls are Out of the Money and only have 3 days until expiration. If the stock does not move above $41.75 or 3%, this trader will lose money.
Due to this risk/reward scenario, I did buy these Calls for $.75 but I took a very small position. I will risk the calls expiring worthless and I have a profit target at $1.40 and $2.00.