Last month I posted about nearly a BILLION dollars in put options placed on the S&P 500 closing down by a significant amount. That’s placing a large bet on the stock market crashing.
Well, come Friday the bet is up…
After yesterday’s Fed action and the resulting boom day, this little piece of market news from last week has gotten overlooked: someone placed a HUGE options bet—$900 million—that only pays off if the S&P 500 crashes between about 35% to 60% down.
These options expire on Friday, September 21.
Would be very interesting to find out who was behind this bet…
I can’t find the links now, but there were explanations posted on some investor forums a few weeks ago. The put options were part of a box spread, as such there are balancing call options.
…
Ah. Found it.
Dispelling the ‘Bin Laden’ Options Trades
Seems like these people have been following it pretty well:
http://www.anomalicresearch.com/optioncall.html
Some have said it’s an easy way for a big investor to dump shares without negatively impacting the market. That sounds plausible to me.
I think that is right. I haven’t looked at the details, but that sounds like what must be going on, though the spread around the current value seems awfully large, but I don’t do that kind of thing so maybe not. I have a different role in the system.