Unknown investor purchases 245,000 x 2,800 Sept 21 puts on EUROSTOXX50

Discussion in 'Wall St. News' started by makloda, Aug 27, 2007.

  1. "Mystery trader bets market will crash by a third"
    16 Aug 2007

    An anonymous investor has placed a bet on an index of Europe's top 50 stocks falling by a third by the end of September, as world equity markets plunged for a third day and volatility hit a three-year high.

    The mystery investor has bought put option contracts on the DJ Eurostoxx 50 index that will result in a profit if it plunges to 2,800 or below by the end of September. Based on the 2,800 strike price, the position covers a notional €6.9bn, and potentially even more using a market price of about 4,100 when the trades were done on Tuesday and Wednesday.

    The identity of the investor is unknown but market sources speculated it was either a large hedge fund hedging itself against deepening losses, or a long-only fund manager pressing the panic button to protect its gains.

    The investor has bought a total of 245,000 put options on the index. The September put option with a 2,800 strike was the most popular DJ Eurostoxx 50 contract yesterday, according to data from Bloomberg.

    Volatility in European equity markets has risen sharply this week as investors cut back on the amount of risk they are taking. The VSTOXX index, which measures the volatility of the DJ Eurostoxx 50 index, hit 34 this morning, which is more than double its three-year average.

    Similarly the volatility of the US stock market was trading at almost three times its three-year average, hitting 30 yesterday.

    However, both indices continue to trade below their 2002 highs.

    Source: http://www.financialnews-us.com/?page=ushome&contentid=2448565379
  2. Wow - I bet that trade marked the bottom.
  3. S2007S


    this has been on many, many blogs....wonder if any financial network will mention it.
  4. Most likely a major fund legging into a short put spread to cover their risk as the market was looking very vulnerable at that point.

    Not really that big a deal on my old desk in London one of our clients was easily capable of putting on 100k+ options a day.
  5. interesting.
  6. teun


    The 6,9 bln euro is BS, the trade value of these options is around 1 mln euro.
  7. perhaps osama trying to pay for the nuke he just bought and shipped to europe?...
  8. Perhaps "they" are hedging it with all of those SPX-Sep-700-puts?
  9. Anyone see the monster call volume on PTR today ? Yahoo is showing 240k DITM calls, but my other feed isn't showing any volume at all.