Trader Makes Huge Bet of 11 Million Something Bad Will Happen Within 60 Days...

reply to post by hawkiye


If I said nothing "bad" was going to happen in 60 days nobody would believe me, so what kind of a bet is that? It is rather vague. Can you put it in a quatrain? LOL

VERY confident or VERY stupid?

If we had 11 million to bet with but had much more in reserve is no different to the average citizen on average pay going to the casino tonight and wasting $5000.

There is NO conspiracy, no inside knowledge. Just a hunch, a guess which if it's right makes him an awful lot of money and if he's wrong well, there's always next time.

Originally posted by jefwane
Caught this link in another thread.

Massive Option Bet Against Bank ETF

According to Barron's columnist Steven Sears, someone made a big bet against the financials ETF yesterday (ticker symbol XLF), and it has everybody buzzing. The trader bought 100,000 put options on the ETF

Here's a link to the options chain for the XLF
From Yahoo Finance

I know options are extremely versatile in the ways that you can use them, and I know it could be some type of spread strategy or even someone caught them mispriced and jumped in to make some money, but if you look at expirys out to April there is some pretty unusual open interest. It looks bearish to me, but there are strange amounts of OI on both the call and put side which leads me to believe in some type of spread/straddle strategy. That's for the February options that expire in two weeks. Looking at March and April, the OI is decidedly stacked to the put side (bearish).

So we have noticed and reported on big bets on a vix rise and big bets against the bank ETF out to April. Assuming it's not a complex options strategy, or some type of hedge, I'd say that someone with deep pockets is betting that something bad will affect the overall market (bet on the VIX that measures volatility) and especially the banks (options activity on XLF) by April 19th.

Strange option activity like this happened in August of 07 right after the surprise discount cut (that we now know was leaked by current Treasury Secretary and then NY Fed President TIm Giethner). That was about six months before Bear Sterns blew up, and a year before Lehman. I don't think we have the same lead time between cracks starting to show and things blowing up as we did then due to the lack of remaining policy tools available to the Fed. I'm going to be looking for strange option activity in components of the XLF as well when I get a chance. About a month before Bear failed someone opened up some way out of the money puts that were basically failure bets that paid of big when Bear Sterns failed.

Good find and thanks for your detailed explanation! Those that feel its no big deal I think are missing the point. It doesn't matter how deep of pockets the one making the bet has or if it is part of a strategy to cause something. The point is that it is an indication of something big set to happen.

For those of you that think they're betting on an economic crash, I don't get the logic. What's $11 million if the economy crashes?

There are people whom piss away that kind of money at roulet on a regular basis. 11 Billion, oh yes you must be very confident. 11 Million? In the world of high finance, meh.

From Steve Quayle's inside source "V" on Jan 24th:

Today I want to bring to remembrance something I have highlighted months ago in one of my alerts, that as the endgame is being played out you will see the market soar, the dollar rise, metals suppressed, the VIX the lowest its been prior to collapse. In other words I said that everything will be done to make the US look like the safest market to every non insider in the world. Am I wrong? Look at the DJIA at an all time high with the volatility index (VIX) at an all time low. In other words the mindless orgasmic party has begun on wall street, the revelers are euphoric as a bunch of teenagers on a drug binge. This is the fools rally that I had feared and history will repeat itself. I will update soon. The collapse will begin...V

Originally posted by peashooter
For those of you that think they're betting on an economic crash, I don't get the logic. What's $11 million if the economy crashes?

edit on 7-2-2013 by peashooter because: typo

Again your're missing the point. It doesn't matter what 11 million means to the economy. It matters that such a bet is indicative of a huge stock market down turn. Even if it is a billionaire making the bet they did not get there by losing 11 million dollar bets. They don't care if he economy crashes to them it is just another bet they are confident they will win or they would not be making it.

The other thing people seem to be ignoring is that there are more then one of these bets and corporate insiders are dumping stocks at 9 times the usual rate as I posted in my second post to this thread. This corroborates the OP So now we have several indicators that insiders are expecting a crash.

Unfortunately, the first quote from the OP made no sense to me and the english in it is appalling so I lost interest but I don't think 11 odd million is really that much in their minds so it would be of little consequence if it were only one bet. The worrying part, as the OP rightly says is that it isn't. That has me scared.

reply to post by hawkiye


He could just be working the chart and making a bet based on technical analysis. The stock market only goes so high before it pulls back. This guy could just be looking at a chart and its contra indicators and be making a bet that its going to pull back. He doesn't have to excersize his put options and he can sell them before they expire. 11 million really isn't much when you consider how much money is in the market, and he could be operating on margin which requires less money. I see it as a non issue.

reply to post by 12voltz


it simply means people are betting there will be a loss..a major loss.. an unusual loss..

shorting a stock

- Between September 6 and 7, the Chicago Board Options Exchange saw purchases of 4,744 put options on United Airlines, but only 396 call options. Assuming that 4,000 of the options were bought by people with advance knowledge of the imminent attacks, these "insiders" would have profited by almost $5 million.

- On September 10, 4,516 put options on American Airlines were bought on the Chicago exchange, compared to only 748 calls. Again, there was no news at that point to justify this imbalance; Again, assuming that 4,000 of these options trades represent "insiders", they would represent a gain of about $4 million.

- Morgan Stanley Dean Witter & Co., which occupied 22 floors of the World Trade Center, saw 2,157 of its October $45 put options bought in the three trading days before Black Tuesday; this compares to an average of 27 contracts per day before September 6. Morgan Stanley's share price fell from $48.90 to $42.50 in the aftermath of the attacks. Assuming that 2,000 of these options contracts were bought based upon knowledge of the approaching attacks, their purchasers could have profited by at least $1.2 million.

- Merrill Lynch & Co., which occupied 22 floors of the World Trade Center, saw 12,215 October $45 put options bought in the four trading days before the attacks; the previous average volume in those shares had been 252 contracts per day [a 1200% increase!]. When trading resumed, Merrill's shares fell from $46.88 to $41.50; assuming that 11,000 option contracts were bought by "insiders", their profit would have been about $5.5 million.

On September 29, 2001 - in a vital story that has gone unnoticed by the major media - the San Francisco Chronicle reported, "Investors have yet to collect more than $2.5 million in profits they made trading options in the stock of United Airlines before the Sept. 11, terrorist attacks, according to a source familiar with the trades and market data".

"The uncollected money raises suspicions that the investors - whose identities and nationalities have not been made public - had advance knowledge of the strikes".

whatreallyhappened.com...

Originally posted by sligtlyskeptical
This trade was most likely to protect another long position. Let's say you have $500 million in stocks. By spending $11 million he has pretty much insured himself from losing too much if the market goes down. If it continues to go up this trader just makes a little less.

and THAT IS how it's done. Best answer yet.

Originally posted by binkbonk

Originally posted by sligtlyskeptical
This trade was most likely to protect another long position. Let's say you have $500 million in stocks. By spending $11 million he has pretty much insured himself from losing too much if the market goes down. If it continues to go up this trader just makes a little less.

and THAT IS how it's done. Best answer yet.

totally makes sense..

cause thats how I play roulette!!

Originally posted by smithjustinb
Sorry I didn't read the thread, just the title.

edit on 7-2-2013 by smithjustinb because: (i like taters)

No problem, your contribution is greatly appreciated anyway.

Originally posted by hawkiye

Originally posted by peashooter
For those of you that think they're betting on an economic crash, I don't get the logic. What's $11 million if the economy crashes?

edit on 7-2-2013 by peashooter because: typo

Again your're missing the point. It doesn't matter what 11 million means to the economy. It matters that such a bet is indicative of a huge stock market down turn. Even if it is a billionaire making the bet they did not get there by losing 11 million dollar bets. They don't care if he economy crashes to them it is just another bet they are confident they will win or they would not be making it.

The other thing people seem to be ignoring is that there are more then one of these bets and corporate insiders are dumping stocks at 9 times the usual rate as I posted in my second post to this thread. This corroborates the OP So now we have several indicators that insiders are expecting a crash.

Agreed, and it need not be a private corporates get together, it could be another entity, perhaps certain champions of the old USSR have decided it is payback time from the Ronald Reagan era, when Reagan put paid to the Russian economy, (mind you that cost America a heap too) but then making all the right noises, made it all okay.

I've sent an email to the editor of The Sovereign Society (investment research company). I get newsletters from them on what stocks may start to take off. I'm hoping they can shed some light on this.

Funny thing, I've been subscribed to them for awhile, but have yet to get the nuts to buy stocks. Maybe one day I will, haha.

I'll update if & when I get an answer.

Originally posted by JustMike

The following is my opinion as a member participating in this discussion.

Is 11.25 million dollars such a huge amount in terms of what these traders deal in? I simply don't know what the typical range is for their deals. What qualifies as "small", "average" and "huge"?

11.25 is a lot when you're risking it all. 11.25 isn't a big trade if there's little chance of a downside though.

Also, could we have some notion of what the trader stands to gain (or lose)? Is this trade leveraged in some way, or is it a straight percentage gain/loss calculated against the 11+ mill?

He can gain about 12 times his investment last I looked.

Finally (and please forgive all my questions!), is there any way for traders to hedge such a deal so that no matter what happens, they don't stand to lose a great deal? I understand the basics of going long or short, but once it gets into things like the VIX, I'm pretty lost!

Yes, but then there's little up side also. Big risk = big reward..or loss
VIX is the measure of volatility (panic) in the market.

It appears that he's doing a call spread. This limits his loss to the invested amount but has the potential to gain about 1200% if it works out to produce maximum return.. The thing he's betting on requires the market to basically go in to chaos state like it was when all the European debt stuff was at its height last year. Most investors are singing "Happy days are here again!" right now with the S&P near 1500 and the Dow near 14,000. So his trade is raising a few eyebrows. 11.25 million is a lot to risk on just crossing your fingers. Hope that helps... extra DIV