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Who Traded 55,000 Bear $30 Puts Tuesday?

Discussion in 'Political Discussion' started by Terry Glenn is a cowgirl, Mar 17, 2008.

  1. Terry Glenn is a cowgirl

    Terry Glenn is a cowgirl Banned

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    This past Tuesday, when Bear Stearns(BSC - Cramer's Take - Stockpickr) was trading around $65 a share, there was huge put volume in the March $30 strike.
     
  2. Terry Glenn is a cowgirl

    Terry Glenn is a cowgirl Banned

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    Over 55,000 contracts traded that day at an average price of 15 cents a contract. This is an extremely unusual trade in terms of the number of contracts and how far out-of-the money those options were at the time. This begs the question of why someone would execute such a transaction.
     
  3. Terry Glenn is a cowgirl

    Terry Glenn is a cowgirl Banned

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    First, it's important to understand that buying a put gives you the right to sell the stock at the strike price. So to buy a put that requires the stock to decline over 50% is essentially a bet that the company is possibly on the brink of going out of business or about to deliver some terrible news.
     
  4. Terry Glenn is a cowgirl

    Terry Glenn is a cowgirl Banned

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    Remember, these options expire on March 20, so that left only 10 days for some event to occur that would cause these puts to go into the money and have some value. So it appears that as rumors began swirling early in the week that Bear was having liquidity problems and might possibly be bordering on insolvent, someone took that to heart and bought the puts as disaster insurance. And today came news that several banks, including Goldman Sachs (GS - Cramer's Take - Stockpickr), would no longer act as a counterparty to any transactions with Bear. The inability to execute trades would essentially put Bear Stearns out of business.
     
  5. Terry Glenn is a cowgirl

    Terry Glenn is a cowgirl Banned

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    Hence, we have today's selloff in which shares of Bear are down some $25, or 44% to around $30 a share. It's not a surprise that those $30 puts are the most active strike today. With an hour left in the trading day, over 40,000 contracts have traded. This surpasses the open interest of 36,000 contracts that were open as of this morning.
     
  6. weswelker#83

    weswelker#83 In the Starting Line-Up

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  7. patsfan13

    patsfan13 Hall of Fame Poster PatsFans.com Supporter

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    The SEC will hammer someone if this is insider trading. they shoua stuck with 10-15 puts that many options is gonna get as lot of attention. If they had shorted the GBP/JPY they could have picked up 1000 pips legally.
     
  8. Terry Glenn is a cowgirl

    Terry Glenn is a cowgirl Banned

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    Actually, it's a very common thing... this insider trading.

    911... Enron... on and on you could go.

    Heck, I shorted American Airlines when I seen 911 happen.

    Made a few bucks.

    I didn't have insider knowledge beforehand (hint, hint) though.

    It's the Amerikan thing to do.
     
  9. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    So you profited off the terrorism? Well, you did describe yourself as conservative.
     
  10. otis p. driftwood

    otis p. driftwood Experienced Starter w/First Big Contract

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    Another offensive statement. Way to go.

    Got any Ronald Reagen alzheimers jokes, maybe?
     
  11. reflexblue

    reflexblue PatsFans.com Supporter PatsFans.com Supporter

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    #91 Jersey

    No do you I'd like to hear some.
     
  12. QuiGon

    QuiGon Banned

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    Sounds to me like someone maybe has some splainin' to do... but, in all honesty, you post lacks some very relevant information. What is the average volume of BSC $30 puts over the past year or so..? A put is a great way to hedge your best if you have a large position in one stock. Maybe some mutual fund or hedge fund manager got nervous and did something that turned out to be rather wise, but not improper.
     
    Last edited: Mar 18, 2008
  13. Fogbuster

    Fogbuster Pro Bowl Player

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    Last edited: Mar 18, 2008
  14. DarrylS

    DarrylS PatsFans.com Supporter PatsFans.com Supporter

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    Another hijacked thread, that seemed reasonably intelligent...
     
  15. Fogbuster

    Fogbuster Pro Bowl Player

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    Why, thank you!!!

    :D

    Now even MORE intelligent!!

    :singing:

    //
     
    Last edited: Mar 18, 2008
  16. Terry Glenn is a cowgirl

    Terry Glenn is a cowgirl Banned

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    Inside jobber terrorism... ala CIA.

    It isn't like rocket science...
     

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