Posted on 01/22/2015 6:15:30 AM PST by Citizen Zed
Shortly after noon ET, the trader purchased 50,000 Jan. 23 weekly 195-strike puts on the popular SPDR exchange-traded fund tracking the S&P 500, which trades under the ticker symbol "SPY." These options are perceived to have a low probability of paying off, which explains why they traded at a price of 9 cents a share, for a total outlay of $450,000.
That is the most the trader can lose, and as long as the SPY stays above $195 through Friday, the total amount will indeed be lost. However, if the S&P falls 5 percent between Wednesday at 2 p.m. ET and Friday's close (to give an example) the trader will enjoy a quick profit of more than $12 million.
(Excerpt) Read more at mob.cnbc.com ...
Gutsy? Or planning a little market manipulation? (Not that I have any idea how).
A lot like playing your hunches in Vegas. Aren’t you glad you have an “expert” playing the stock market with your money?
I calculate $0.09 x 50,000 as $450. Why am I three-orders-of-magnitude off?
at 9 cents a share, only 4500 dollars.
Isn’t it $4500?
“
I calculate $0.09 x 50,000 as $450. Why am I three-orders-of-magnitude off? “
You forgot the commission!
It must be nice to have your market manipulation bet published so that everyone can help you win
I bet the shareholders of that stock are happy to be participating in a ‘bet’
All it would take would be a few of his friends dumping the stock to make the price fall. (and they don’t ‘lose’ they just get whatever the stock is worth now anyway)
You’re right, but neither of us comes up with $450,000.
Because an options contract is not for a single share, but for a batch of shares.
You obviously don’t trade options. You have to multiply the number.
Agreed, there must be something else about these contracts we are missing.
That's why you're here. If you would please, elaborate a bit.
The trader is losing his money this morning. It could have just been a hedge against a large position.
1 contract does not control just one share.
So each option contract is for 100 shares and he bought 50,000 which is 5 million shares; correct?
on that particular contract..yes..
Options are for 1,000 shares of stock. So, one option at $0.09 is $0.09 times 1,000, so it costs you $90 for that option contract at $0.09.
I shorted this morning on this run up...let’s see if Mr Big knows anything.
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