How bad can this option idea go? Billions in profit potential, but at what cost?

Discussion in 'Options' started by Overnight, Aug 14, 2019 at 6:58 PM.

  1. Overnight

    Overnight

  2. The orange will drop all tariffs on china if SP goes down another 5 %, look at his twitter feed... Full blown panic talking to himself, mentioning china non stop, then he asks xi for personal meeting on twitter

    Big cohones behind the trade tho... 3.5 Billly potential profit, the traders bonus is fuck you money if he's right
     
  3. ensemble

    ensemble

    The 315/320 call spread was for 110,000 contracts and 270/276 short put spread was for 11,000. Now I am intrigued. Capture.PNG
     
  4. I did a count of monthly changes on SPY for 15 years and chances are good it will be up. But that's a big bet, so they must be offsetting some short positions?

    TOTAL MONTHS = 178

    DOWN MONTHS = 60
    UP MONTHS = 118

    %UP MONTHS = %66.3
    AVG PCT UP = 3.04

    %DOWN MONTHS = %33.7
    AVG PCT DN = -4.03

    AVG MONTHLY RETURN = %0.66
    DROPS >= -8% = 7


    UP IN A ROW

    ONE IRUP = 17
    TWO IRUP = 7
    THREE IRUP = 6
    FOUR IRUP = 4
    FIVE IRUP = 2
    SIX IRUP = 1
    SEVEN IRUP = 2
    EIGHT IRUP = 0
    NINE IRUP = 0
    TEN IRUP = 1


    DOWN IN A ROW

    ONE IRDWN = 27
    TWO IRDWN = 11
    THREE IRDWN = 4
    FOUR IRDWN = 0
    FIVE IRDWN = 0
    SIX IRDWN = 0
    SEVEN IRDWN = 0
    EIGHT IRDWN = 0
    NINE IRDWN = 0
    TEN IRDWN = 0
     
    Windlesham1 likes this.
  5. My data is simply third Friday close to third Friday close. Just shows what might happen if monthly option spreads were done and held until expiry, for 15 years. Granted, not the best way to trade it.
     
  6. If the guy has a big short equity position against this options position, he is going to get murdered on those long vega call spreads on a vol imploding rally where the VIX goes back to 15%. The all-time highs in the SPY are like 302. Not a chance in hell we make new all-time highs this Oct with the Chinese holding out until at least next years election, and the rest of the world entering into a recession.

    I would have loved to have taken the other side and slightly under-hedged it, and then bought extra put spreads to hedge against the short vega and the call steepening on a market melt-down.

    Crap trade. Guy will probably get fired.
     
  7. Bum

    Bum

    Quote from article:
    "The $315 calls, if fully exercised could yield a net position of about $3.5 billion for the investor."

    Net position........ not profit.
     
  8. Overnight

    Overnight

    K, so if he fully exercised the calls, how much would he be on the hook for on the puts that same day?