Bloomberg reports on large IWM put spreads taken yesterday morning, with the IWM at 115. Apparently one trader purchased May 115 puts and sold the same number of May 107 puts to finance that purchase for a net cost of $5.3 million. Just as we talk about option spreads in class. The first leg was in the money right away. The 107 strike was probably chosen as it is a little below where IWM closed during the February 2014 melt-down. Read the full story here.
IWM closed yesterday under 112 and is looking to go lower pre-market. My version was 20 naked April 115 puts bought into the melt-up on Wednesday and another 30 Thursday morning, which I flipped at the close, setting stops on the others after class. FAZ will make me even happier after the JPM miss this morning as will FXI. Getting too easy already, feels great to be up huge for the year and earnings season has barely begun.
One of you asked about adjustable options traded by “accident” over a smart phone. These appear to be “path-dependent” options which we haven’t yet addressed, coming attractions.