Some guy bought a bunch of GE puts for 5,10 sold 7.50

Discussion in 'Options' started by noob_trad3r, Jan 20, 2009.

  1. The contract count seems extremely high and it is for February. Sounds pretty risky. With the limited amount of time, the high volatility on the market and it is pretty out of the money why would someone do this unless they have some inside details or some kind of hedge?

    The bet from what I can guessitmate would cost 288,000 dollars!

    Wow that is a big bet.
  2. If that someone really bot the 5 and 10 puts and sold the 7.50 puts, that's a butterfly.

    How do you know which options the customer bought or sold?

  3. You've lost me. It looks like you would need about 70K contracts to equal $288K cost.

    Are you looking at sprdbook with TOS?
  4. anybody selling covered calls on GE? good strategy for this month?
  5. Butterfly indeed

    What's his cost ?
  6. Wow that is a stupid bet. I read the cost is 19 cents. I mean this is a lotto ticket hail mary trade. There are so many things against this trade it is not even funny.

    Would be funny if Buffet was the one selling the puts on the 5 and 10 side to the gambler.
  7. A butterfly trades as a three-way spread. there's no one who buys the wings and then sells the body. At least not when trading such large size.

  8. He put that trade on mid week ahead of tomorrows earnings. The added volatility expansion provides a opp to trade out the contracts lowering average cost. If GE's report and guidance looks pitiful the stock will trade lower and that fly will trade higher by all measures ahead of weekend theta loss.

    I don't know about the soundness and salvage value of this spread folks. It looks like a gamble indeed with such a short time horizon. But i suppose if the trader really thinks the ship sinks on tomorrows earnings you go for the deltas baby.

  9. HE LOST THE BET... if it went to 7.5.. his ROI would be 7-10X times...

    too bad..
  10. GE will start behaving like BAC, and will hit 5 handle soon.
    #10     Jan 23, 2009