[snowsislander]

4500 contracts is a fair number of contracts in a single go. [I have to admit, though, I am curious how long it takes him to get these trades through? Does he just put up ladders and let people nibble away, or is he using sophisticated program trading to automatically put the orders in small chunks or what? I cannot imagine that the traders wouldn't eat him alive if he just drops market orders in at this kind of size.]

The current position limit on AMR is 75,000 contracts. Individual trades at 4500 contracts probably weren't hitting any position limits back in 2001, though I don't where to find that kind of historical position limit information.

But the recent average volume for AMR is only 4,500,000 shares, or 45,000 options contracts equivalent, so assuming the volumes are roughly the same today, trading 4500 contracts would be equivalent to trading 10% of the daily volume. That's a reasonable chunk, and that would get any broker's attention; you are starting to run into other limits when you are getting into that kind of size, certainly if we are talking about retail customers.

[fso301]

Actually, I need to qualify my statement. I know people who routinely trade 4500 contracts in a single company but not in AMR.

Most I've done was 1000.

[angkor]

That's a reasonable chunk, and that would get any broker's attention; you are starting to run into other limits when you are getting into that kind of size, certainly if we are talking about retail customers.

They say it wasn't retail but some institution using a "sophisticated" hedge.

But it looks pretty simple: long on a short-pummled AMR, and the UAL puts as a hedge.