http://www.cnbc.com/2015/10/13/trader-bets-5-million-on-twitter-turnaround.html Twitter shares soared as more than 5 percent Tuesday morning after the company announced it would eliminate 8 percent of its global workforce. News of the plan leaked out on Re/code late Friday, allowing one savvy trader the opportunity to place a bullish bet on a Twitter turnaround. On Monday, in a trade that raised a few eyebrows in the options market, one trader spent more than $5 million on a bullish bet that Twitter shares will rise 25 percent in the next 16 months. The trader purchased 10,000 of the January 2017 33-strike calls for $5.15 each. When investors buy call contracts, they are hoping the stock will rise above the strike price by more than the cost of the trade. In this case, the trader will need Twitter stock to rise above $38.15 by the end of January 2017. Twitter hasn't traded above that level since mid-July. Since each call option accounts for 100 shares, the nominal cost of the whole transaction is just north of $5 million.
I piggy back on big trades but Twitter is not something I would risk because I don't get it! I was slow to understanding Facebook during their IPO but once I got the hang of Facebook I was lucky to buy when it fell to $16, I posted that trade here a few years ago. That trades seems large but than again, I saw people buy $300 million worth of a Oil Stock that went from $42 to $16 where a Massive Trader stepped and bought $500 million worth only to see his stock end up at $5.00 or $6.00 and he ended up getting Margin Calls, selling his assets to cover that trade! If T-Boon and other Oil and Nat-Gas Traders get things badly wrong and their in this industry, just be careful! Look at that Hedge Fund that bought YUM after I bought YUM at $67 four times! He's back again and my YUM contracts are up January $67.50-$70s are up and a few Aprils. I made more in Points that those Big Traders did(Not dollar wise, they lost money, I made about $50k churning YUM since the Rat Scandal two years ago. I like Trading Twitter so I hope it does not tank, its one of the stocks I make a market in and may it go to $50!
None of you have any clue (save for cdcaveman) whether the individual/firm went long 10K calls outright. Where was the fill (relative to NBBO)? Assume that NBBO was 495x515; they could be short 500K shares for the long 33 straddle. Regardless of the flow; the MMers were most/all of the other side, so wtf do you think they are doing with it? Moving shares. Do we talk about the MMers exposure as relevant? It could be pre-arranged on the sell-side; or a TWTR insider short calls OTC to avoid regulatory (or pick a reason to go OTC, pkging, etc.) as part of a risk-reversal against his locked-up long. Short OTC calls, long OTC puts, and bank buys listed deltas at the offer and still earns a ton of edge. This is a daily occurrence. The only "eyebrows" raised are those of the moron-variety. And Rabid, nobody wants to here about your fiction. Give it a rest.