GIL - Puts Trade to Winner

Discussion in 'Trading' started by livevol_ophir, Dec 10, 2009.

  1. livevol_ophir

    livevol_ophir ET Sponsor

    The company averages 470 option contracts a day - in the first 1.5 hours of trading over 5,400 contracts have traded.

    The largest trades of the day have been purchases of the March 15 puts. The volume is very close to the open interest. There is a clear increase in OI in one day in these puts on 10/29 (implying the opening trades were 10/28).

    We can see that the opening trades were sales. Note also that the 1.30 trade is a sale on a 0.30 cent wide market (1.30 x 1.60). When I see size trades on the NBBO of wide markets it makes me feel even more strongly that the order flow has information. i.e. someone believes this is a money making bet so much that they do not tip their hand with a negotiated price; they just hit/take what the NBBO bids/offers.

    So what's what? It looks to me that someone sold 3500 Mar 15 puts @ 1.30. Today they are buying them back for 0.35. That $0.95 x 3500 x 100 = $332,500 gain in 6 weeks. Nice trade. Remember this symbol - if another large opening trade goes up on the bid or offer of a wide NBBO, maybe it's worth investigating.

    You can see the trade details, prices, dates, etc. in my blog.