Interpreting Options Trading Activity at DMD (Demand Media Inc.)

Discussion in 'Options' started by unemon, Nov 24, 2014.

  1. unemon

    unemon

    Hello,

    is someone able to explain the trading activity in DMD call options we have been witnessing over the past 4 weeks?

    An example is the trade occurred today:

    1. 6,494 Dec20 $6 Call have benn traded at ASK ($0.40) -->should be someone going long the Call Options).
    2. The price per share of DMD did not react
    3. 3 minutes after the Call Options traded, a trade of approximatels 300,000 shares of DMD was reported (at a minor Exchange / Chicago). The PPS did not react?

    What is the rationale behind this options trade? ...

    any clue?

    Thank you
     
  2. newwurldmn

    newwurldmn

    Someone probably bougth the options delta neutral. They think realized vol will be higher than the implied vol they are paying.
     
  3. unemon

    unemon

    does vola arbitrage ... usally not happen in more liquid names?