Technology SPDR (XLK) - Enormous 1 Sided June Option Action

Discussion in 'Options' started by livevol_ophir, May 17, 2010.

  1. $1.3MM in premium, so it's probably some buy-side equity shop buying cheap gamma/dgamma in tech. It's unlikely it's a vol-hedge against another ticker, as anyone spreading would do the ATMs to gain sensitivity. I doubt he's trading the synthetic put that deep, but who knows.
     
    #11     May 19, 2010
  2. livevol_ophir

    livevol_ophir ET Sponsor

    Agreed 100%. Not likely a hedge, a straddle or a put... Just kinda a long shot.
     
    #12     May 19, 2010
  3. so, the second 37k calls is people bettting that the first better knows something?:)
     
    #13     May 19, 2010
  4. livevol_ophir

    livevol_ophir ET Sponsor

    Or a double down at a better price. :cool:
     
    #14     May 19, 2010
  5. This is a strange bet. If the calls were a bit meatier, I would suggest that it was a hedged (delta neutral) and a bearish market bet. This doesn't really make sense with .15 calls though.

    Since we're throwing out theories, I would guess that this trade is an upside hedge against a huge portfolio of upside short volatility in other tech products.

    The trader probably sold 1000 20 delta calls in various other tech products, the upside portfolio gap risk was showing blowout type of numbers, and the risk manager forced an upside hedge.
     
    #15     May 19, 2010