High Roller Option Trades of the Week – April 8th

A recap of the most expensive option trades of the past week, from April 4th through April 8th.

With the Fed in focus, the market saw plenty of volatility this week. And where there’s volatility, there’s a trading opportunity! 

Let’s dig into the most expensive option trades of the week, and how those trades fared as the week went on!

Most Expensive Option Trade of the Week

Alphabet ($GOOGL) $2400 Strike Calls

Bought near Thursday’s close in two separate orders, this trade was a doozy. At 500 contracts each (a total of 1,000), this trade cost the buyer an eye-popping $37.2 million dollars. Expiring June 17th, this trade follows last week’s most expensive option trade in the same exact contract! Except this time, the trade is worth $14 million more dollars. Someone is stacking their chips heavily into Alphabet.

Price equivalent: This trader could have bought a ticket to join Jeff Bezos on a trip to outer space on the Blue Origin — with $7 million dollars to spare.

How the trade went: Because this trade was picked up near the close on Thursday, it’s trading at about the same price that it was originally bought at. But last week’s $23M trade in the same contracts (purchased for $462/contract) are down roughly 19%. Likely bought by the same trader, this massive bet potentially represents a big “double-down”.

FRIDAY 4/08 EDIT: ANOTHER 500 CONTRACTS BOUGHT. $17.575M additional premium spent on the same $2,400 strike calls for June 17th. Between the three orders, that’s $54.775 million, not counting last week’s $23 million dollar purchase of the same contract. Whoever this big player is, they really, really mean business.

Most Expensive Short-Dated Option Trade of the Week

Mastercard ($MA) $425 Strike Put Weekly’s

This trader must have been feeling brave. On April 6th, they bought 1,900 $425 strike $MA puts against an open interest of 0, expiring April 8th, whilst $MA was trading at $355.20. The trade cost this buyer $13.5 million dollars ($71.05 per contract) and was the most expensive put trade on the market this week. 

High volume trades against low open interest is one of the biggest things we look for when investigating unusual options activity. So seeing 1,900 volume against an open interest of 0 is very strange. The fact that it was bought with only two days to spare is even stranger! This buyer had a high conviction that Mastercard was going down, fast. And they were right.

Price equivalent: For the price of that trade, you could buy George Washington’s original, hand signed Acts of Congress (which is also the most expensive autograph in the world as of 2018)!

How the trade went: The day after this bearish bet was placed, the price of Mastercard’s stock declined as much as 2.5%, dropping from the $355.20 purchase price to as low as $345.80. In unison, the mid price of those $425 strike put options jumped as high as $79.75. That means this trader had the opportunity to claim up to $8.70 per contract in profit, for a total profit of $1,653,000! 

Most Expensive OTM Call Trade of the Week

KraneShares China Internet ETF ($KWEB) $33 Strike Calls

Bought on Wednesday, April 6th were these $33 Strike $KWEB calls. This buyer picked up 8,000 of them against an open interest of 30! Just like the last trade, this is a huge discrepancy, making this trade notable. 

At the time of the buy, $KWEB was trading at $29.84, meaning options were bought out-of-the-money. That said, they expire on November 18th, 2022, so this buyer has a lot of time to be right. In total, this order cost the trader $3.168 million dollars, at $3.96 per contract.

Notably, this trade followed a similar unusual call purchase spotted by Market Rebellion’s Unusual Options Activity team.

Price equivalent: Rather than trading these options, they could have bought this entire 40-unit apartment community in West Virginia… or this one bedroom condo in New York City.

How the trade went: Though these options traded as high as $4.10 after the purchase, the mid price closed on Thursday night at $3.53 — an 11% decrease from the original trade price. That said, this trader has 7 months for these options to move in his or her favor!

Most Expensive OTM Put Trade of the Week

iShares Russell 2000 ETF ($IWM) $160 Strike Puts

On Monday, April 4th, a trader purchased $IWM puts that were more than $47 out-of-the-money. With $IWM trading at $207.01, this trader bought 3,000 of the $160 strike puts. This would be an extremely risky maneuver, if not for the fact that they expire in December 2023. 

Still, this trader spent $2.745 million dollars ($9.15 per contract) on a bet that the $IWM small cap ETF would decline by more than 22%. That’s a bold prediction considering the ETF is already down 17% from its November 9th all time high. And it’s a prediction consistent with unusual option activity that we’ve seen in the $IWM lately. 

Price equivalent: For that price, this option trader could have bought the most expensive vinyl record in the world, Wu Tang Clan’s Once Upon a Time In Shaolin — the only copy in existence.

How the trade went: With the recent price decline, it looks like this trader is already in the green. These contracts, originally bought for $9.15, climbed to a mid-price as high as $11.10 at Thursday’s low — an increase of more than 20%!

Honorable Mention: $9.9M 1DTE Micron Trade

Micron ($MU) $82 Strike Puts

Seven minutes before market close on Thursday, April 7th, one trader made a bold move: 11,500 Micron puts, against an open interest of 853. Bought just 9% in-the-money (with $MU trading at $73.45), and with only one day to spare, these puts cost the buyer $8.65 per contract, for a grand total of $9.948 million dollars!

These options present this trader with a huge potential risk. If Micron releases any surprising bullish news, this could be disastrous. On the other hand, if an analyst comes out and issues a downgrade, or something bearish takes place, this trader could cash in big time on this daring 4th quarter play.

Price equivalent: For the $9.9 million dollars that this trader paid, they could have purchased a 45 second Super Bowl ad spot!

How the trade went: Because this article is released in the premarket on Friday, these options are still trading near what they were originally purchased for. Micron is currently up 0.31% in the premarket at the time of writing, but this type of thin premarket trading could change on a dime. So if you see Micron moving in either direction today, think of this guy, and the nearly $10 million dollars he risked.

Why We Care About Unusual Options Activity

We call watching for unusual options activity “following the smart money”. Why? Because typically, when somebody’s investing a substantial amount of money in a leveraged instrument like options, they’ve done their homework. 

Whether that means they’re paying for professional-grade research, or they know something that we don’t — if they’re willing to put millions of dollars at risk, there’s usually something going on. We can’t read their minds, but we can follow their trades. And sometimes, it pays off.

For instance, earlier this week Twitter’s stock spiked from $39 to $50 overnight when Elon Musk revealed a 9.2% stake in the company. The week before it happened, Market Rebellion saw massive call buying in the name. 

Whether someone just got lucky, or they knew something we didn’t, this was a situation where it paid to follow the “smart money”. If you’re interested in receiving weekly UOA-based trade ideas like the one above, check out Unusual Options Activity.