1M + in profit in 2 days.....

[kadee79]

Anyone see this

Someone is making a lot of money in Applied Materials (AMAT).

On seemingly little news, one trader made a very big bet yesterday that Applied Materials is going to break out to new highs, and so far this trader is winning.

On Thursday, when options volume in the semiconductor ran six times their daily average, one trader bet $1.74 million that the stock will stay above current levels throughout the next week. Specifically, the trader bought 20,000 of the Feb. 27 weekly 24-strike calls for $0.87.

Since one options contract controls 100 shares of stock, each contract in this particular trade costs $87 dollars, bringing the total costs of the trade to $1.74 million (20,000 x $87). In just one day, those calls have nearly doubled in value as shares of Applied Materials have rallied 5 percent in two days. Those calls are now worth $1.60 each, leaving whoever made this trade with a cool $1.4 million in paper profits (20,000 x $73).

"This is the type of trade that catches traders attention," said Dan Nathan, the founder and editor of RiskReversal.com and a CNBC Contributor. "[This trade] is betting a lot of premium for short-dated calls that are in the money with no scheduled events."

www.msn.com/en-us/money/topstocks/how-a-trader-made-more-than-dollar1-million-in-2-days/ar-BBhNl35?ocid=U305DHP 

[ModE98]

That options trader must have millions to work with....big money begets bigger money (making the right play).

[ArchietheDragon]

Who pays the $1.4 million profit?

[mroped]

He'll probably lose it in the next week when prices go down. Unless the " lucky investor" has an inside tip and sels before that.

[Value Buy]

Feb 20, 2015 15:55:06 GMT -5 ArchietheDragon said:

Who pays the $1.4 million profit?

The person  or groups of traders who own the other side of the trade.
Not really different from the profit or loss of a stock trade other than options are much more complex.

[ArchietheDragon]

Mar 17, 2015 20:37:23 GMT -5 Value Buy said:

Feb 20, 2015 15:55:06 GMT -5 ArchietheDragon said:

Who pays the $1.4 million profit?

The person  or groups of traders who own the other side of the trade.
Not really different from the profit or loss of a stock trade other than options are much more complex.

But when selling a stock (long at least) someone wants the stock at whatever price you are selling it at. Does someone at the other end of this option want to buy his option?

[Value Buy]

Mar 17, 2015 20:48:46 GMT -5 ArchietheDragon said:

Mar 17, 2015 20:37:23 GMT -5 Value Buy said:

The person  or groups of traders who own the other side of the trade.
Not really different from the profit or loss of a stock trade other than options are much more complex.

But when selling a stock (long at least) someone wants the stock at whatever price you are selling it at. Does someone at the other end of this option want to buy his option?

Easiest way to describe it, is there are puts and calls which offset each other.
When the price of these options cross a price threshold they can be exercised, closing their positions forcing the losing side to sell to the winning option.

[ArchietheDragon]

Mar 18, 2015 6:25:02 GMT -5 Value Buy said:

Mar 17, 2015 20:48:46 GMT -5 ArchietheDragon said:

But when selling a stock (long at least) someone wants the stock at whatever price you are selling it at. Does someone at the other end of this option want to buy his option?

Easiest way to describe it, is there are puts and calls which offset each other.
When the price of these options cross a price threshold they can be exercised, closing their positions forcing the losing side to sell to the winning option.

Wow.   so really much more of a gamble than buying a long position. 

[mroped]

Legalized gambling, that's what this is. Betting that we will need this " superconductor" thingy in the near future is like chasing a straight playing a seven and a jack.