A few far downside strikes in SPX are seeing action this morning, with 15K Dec12 450 puts (64% out of the moneY) trading in a 1×2 vs 7500 Dec 650 puts to open a new position. Inititor paid $6 ($4.5Million total) and could be looking at positive downside in a very slow grind lower, however, experienced traders tend to consider this type of structure very risky in the case of a downside shock since the 450s have the potential to explode in a panic.
Category: All Indexes
About the Author (Author Profile)
Henry Schwartz is the president of Trade Alert LLC, a provider of real-time options analysis tools to leading Wall Street firms. His systems analyze hundreds of thousands of transactions per second to help professionals identify and interpret market activity in real time, supporting informed trading decisions and intelligent idea generation. He has held institutional trading and management roles with Bank of America, Bear Stearns, Salomon Brothers and the Hull Group, and made markets on the CBOE and AMEX floors in the US, and EUREX and MONEP overseas. Prior to founding Trade Alert, he led the electronic market-making group at Bank of America coincident with the launch of the International Securities Exchange. He received his bachelor’s degree in Economics from the University of California, San Diego and his MBA from NYU’s Stern School of Business.