March TLT 110 calls, wtf?

Discussion in 'Options' started by texrex2002, Oct 12, 2009.

  1. I was browsing the bloomie, and it looks like someone accumulated 1700 contracts in 2 trades: 10k on Friday and another 7k today. notional value: $7.7MM.

    I was looking at a little bit longer term calls as a contrarian play, but someone has a big position on closer in (well, I call it a big position...).

    WTF? any ideas?

    someone praying for an "announcement" by the fed/treasury?
  2. Q12


    more likely an "announcement" by a few major banks rather than the fed. while it's surely an out of the money play, it's not a lotto ticket by any means.
  3. I mean 17,000, not 1700, sorry.
  4. What kind of announcement would make long bonds go up between now and March?

    I guess the expectation is that it'll become slightly less out of the money and he'll exit.

    Something else that really surprised me is that one can buy 7000 contracts in just a few seconds without budging the price... how weird is that? There's not exactly a lot of these on the offer...

    I'll snoop around tomorrow to see if there's an offsetting 17k contracts of some other option on the same underlying that's traded in the last few days...
  5. nickdes


    How do you know if the person bought or sold the calls?

  6. ???

    Someone sold them and someone else bought them.

  7. ^ lol

    what makes me think it's one party is that there was only 2 instances of actvity in these today (within a few seconds of each other), they added up to exactly 7,000 contracts, they were executed over the same exchange, etc.

    it's not just a bunch of onesy - twosey's spread accross the day that happen to add up to ~7k.

    if you look at the most active options on TLT, there's some that saw 65 contracts traded, some with 10, some with 2, and then this one with 7,000.

    same thing last Friday. a couple small potatoes trades, 1 contract here, 2 there, and then BANG: 10,000 contracts.
  8. wayneL


    Yeah but which one is the patsy? :p

  9. None of that gives you a clue as to whther the initiator of the trade, bought to open, or sold to open. Pure volume means nothing. The fact that the whole piece was put up in one or two trades on one exchange only means that the trade was shopped all over the place and the two party's involved simply crossed them at a pre agreed on price on one exchange.

    Again, and its mentioned so often here since people here insist on thinking that any big trade is "someone" taking a shot, just seeing the volume on the tape in options is pretty meaningless. You have no idea who is on which side or who is opening and what they may have on vs. the trade or what they may have put on vs. the trade.
  10. Very true. I don't deny any of it. It's still interesting to see big volume on someting thinly traded and add that to all the other little puzzle pieces flaoting around.

    And yes: it could be that one (or both) of the parties is just hedging another trade. Or, someone thought they'd ride theta on a 7.7MM premium. who knows. (or "someone's" taking a shot, :) )

    I still like openly speculating about it though.
    #10     Oct 13, 2009