How I Saw the SoftBank Rally Coming Dear Savio, You don't have to pay attention to the financial news to succeed with Dark Pool Trader. That's part of the beauty of it. We trade on Dark Pool prints – cold, hard facts – not trends, the news, or any other "soft" triggers. However, I'm sure most of you do spend some time following the financial news – and that you've heard that the recent market decline (and much of the previous rally) was triggered by some extremely large trades conducted by the Japanese multinational conglomerate SoftBank Group Corp. (SFTBY). I didn't know who was making them at the time… but I spotted some of those SoftBank Dark Pool trades and alerted my followers about them. Check it out… Before launching Dark Pool Trader, I notified members of my other services that massive Dark Pool activity had been coming into the big tech stocks since early spring. I had noticed that Apple Inc. (AAPL), Microsoft Corp. (MSFT), Amazon.com Inc. (AMZN), and others were printing heavier than usual. Here are some of my tweets from April 18. 
Here is just one of the prints – a 1.5 million-share trade – I spotted in the Dark Pool on Microsoft from March 24. 
I also spotted some massive, unusual prints in Facebook Inc. (FB) back in early April. 
And earlier this month, we finally found out what was going on – who was making those huge tech trades. On September 4, CNBC reported that SoftBank was buying shares of these tech leaders: SoftBank was trading in names that are among the key drivers of the stock market. Apple, Amazon, Microsoft, Facebook and Google equal about a quarter of the S&P 500, and they have been drivers of a big chunk of its gains. One options trader explained that those names can be proxies for the market, and can be hedged against the S&P 500 and vice versa. When it comes to our trades, it doesn't matter who's creating the prints… though it's often fun to find out later. What's important is that I always see Dark Pool prints like these first before the news comes out – and that means we can pounce on them. The heavy prints that are coming in right now could very well be SoftBank selling – though we won't know for a while. Now, let's take a look at some of the action we saw last week… MRO Puts Many novice option traders believe that if their options are in the money, the price of the option will not decrease, but that is not true. In-the-money options will decay as they get closer to expiration. Out-of-the-money options will decay faster, but both do decay. And that is why, last Wednesday, September 16, I recommended an early sell on the last quarter of our Marathon Oil Corp. (MRO) September 18 $5 Put Options (MRO200918P00005000). We made a 205% return on investment (ROI) on that last quarter – and total blended gains of 139% on this trade, which we started up on August 20. You can see from the chart below that these puts started to gravitate down as the expiration date got closer. There are many ways you can lose money on options if you do not understand how they decay. 
By the time Friday came around, these options went from $0.55 down to $0.26, even though they stayed in the money. Congratulations on this great trade! VALE Calls and T Puts While many of our strangles expired worthless on Friday, September 18, we were able to take 100% profit on half of the Vale SA (VALE) October 16 $13 Call Options (VALE201016C00013000) that we bought on September 11. Market tops are tough to trade… so it was nice to be able to squeak out a winner there. Stay tuned for my recommendation on the second half of that trade. The AT&T Inc. (T) October 2 $28 Put Options (T201002P00028000) we picked up on September 10 might start to show a profit this week. You can see from the chart below that the stock is beginning to move lower. 
Life Past a Market Top Two weeks ago, in my Dark Pool Trader Weekly Review, I said that the market would turn bearish due to massive Dark Pool activity that was coming into the S&P 500. If you recall, I shared with you a specific level of $345.43. I said that if the SPDR S&P 500 Trust ETF (SPY) could not stay above that level, this would be bearish and to put protection on. I know many of you have long-term investment accounts. Dark Pool Trader is not for long-term investing. Of course, I don’t know what you all have in your long-term portfolios, but I will warn you when I see Dark Pool selling so you can put on the appropriate protection in your long-term accounts. Some of you may want to sell some long-term holdings, while others may want to hold onto your long-term positions and buy protective puts. Below is the weekly chart of the SPY. You can see we are below the $345.43 level. In fact, we had some other major levels of selling this week. The Dark Pool sold at $334.50, $342.64, and $338.58. If we stay below these levels, protection is highly recommended. 
I also spotted extremely heavy Dark Pool activity on the Invesco QQQ Trust (QQQ), the Nasdaq ETF. Massive sell prints have come in at $270, $270.33, $272.10, $274.40, $275.13, and $283.50. If we stay below these levels, I will highly recommend putting on protection if you own technology stocks longer term. These are the heaviest levels of Dark Pool activity I have seen since last December and January. 
With that said – and with the market dipping even further today – I’m definitely looking forward to sending you some brand-new recommendations this week. Until next time… Happy trading!
Stefanie Kammerman,
Editor, Dark Pool Trader
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