Originally Posted by
kadakn01 Another option trade this one for 12K calls (open interest is currently at 4,638 so this is 3X the current number of contacts "open" ) at .31 for Aug 2016 at $8 strike (at the ask) or $372,000 and coded a "BWRT" simply meaning it is 1 leg of a order involving either a sale or buy or stock at the same time. So if we look at the trades, we find a 420,000 share block (coded as a "Qualified Contingent Trade" or essentially contingent on the option order above executing at $7.40 (done at $.06 below the bid or $.07 below the last trade at $7.47 when it went thru) for 3.1M
Both trades were done at 1:31pm EST
This "appears" to be a sale of stock and a purchase of 3X the number of calls at a slightly higher price. This one could be a trader taking some money off the table by pocketing the difference of the $3.1M minus the cost of the calls of about $372K or $2.7M
It could be part of some other strategy as well such as a short sale and buy of calls to hedge, we can't say with 100% certainty. There was a smaller one yesterday as well. in any case the option market has been heating up with mostly bullish type trades in the past several weeks, no guarantee they are right, but good to note.
In some cases with a BWRT trade it has been a buy write or purchase of stock and simultaneously selling call options to get some income, this is normally where I have seen them done.
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WARNING the following is for (M8 mainly) option experts only!!!!!!!!!!!!
My reason for suspecting this is in fact NOT a short sale and buy of options to hedge is the following. If you take the Delta on the calls which are .35 and multiply by 3 you get 1.05
The sale of stock is a 1 delta.
So what I suspect is a Stock replacement , buying calls to open at total of 1.05 Delta and selling existing stock to close at 1 Delta. I doubt it would be a synthetic long put because the deltas cancel. One would be long and short at almost the same delta.
End of warning, back to scheduled programing!!!!!!!!!!!
Posted on my Priv