Warrior Trading Blog

$KBH Put Sweep Nets Options Trader +32%

$KBH Put Sweep Profits with Fed Announcement

Volatilty spike following the Fed on Wednesday gave us the push in selling we needed to hit our profit target on $KBH.

KBH Put Sweep

 

If you were in the chat room last Friday, you got my options alert on KBH, following a put sweep after a big run up on the daily chart. What is a put sweep, you ask? A put sweep is defined as “A sweep is typically a large order broken up into a number of smaller orders that trades across multiple exchanges.” This is done when a trader has a desire to quickly enter a trade at a certain price with large size. What does this tell us? It tells us that someone, usually a large investor or institutional trader wants to be in a trade quickly, and at a very specific price. This could be ahead of news, or some other event that they may think they are privy to, that will likely move the stock. Sometimes, an options sweep can move a stock in and of itself, without any actual news or catalyst.
The idea behind trading some sweeps is, they can foreshadow something coming that we as retail traders may not know about. Now, not every large block options order is a sweep or a trade worth blindly following. But, as in the case with the $KBH put sweep, the stock had a nice technical setup for a reversal trade anyway. Look at the big run up into overbought RSI. This is one I may or may not take a reversal trade on, but with the large put sweep that fired off, it gave me the added confidence that someone with a lot more money felt the same way. With a tight stop, these trades are usually quick and very reasonably priced. Check out the details below in my video recap.

 

Here is the video recap on my KBH put trade: