Carl Icahn Makes $50M Bearish SPX Option Trade

Rebel Hub Education

by

Justin Nugent

February 13, 2023
at 3:41 PM

Billionaire investor Carl Icahn is no stranger to taking big risks in the stock market.

In the 1980’s, Icahn was called a “corporate raider” after he developed a pattern of hostile takeovers and asset stripping. Later in his career, Icahn would continue his corporate influence, pushing eBay to spin-off PayPal, and then consequently swapping his stake in eBay for shares of PayPal — a move that paid off well as PayPal continued to grow rapidly.

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Icahn has also made moves that failed. In 2016 Icahn took a large stake in failing car rental company Hertz — a stake he would later sell for a near $2 billion dollar loss in 2020. Still, as one of the richest and most legendary investors in the world, Icahn’s word carries weight. So when Icahn made a massive options trade in SPX weeklies, we all started paying close attention.

Carl Icahn’s Option Trade

On February 8th, Carl Icahn publicly picked up $50 million dollars worth of S&P 500 puts using the SPX index at the $4050 strike price, expiring 2/17.

Why is this notable?

Tuesday is the CPI Report — a moment well-known for shaking the market. This goes double following two recent developments:

Jerome Powell’s most recent speech clarified that if inflation continues to move higher, it will be appropriate to increase rates accordingly (something that the market wasn’t prepared for)

Following that speech, December inflation was revised higher, from -0.1 to +0.1 month-over-month.

These two key developments have stalled the newly forming market rally. A soft CPI that comes in below expectations will almost surely sink Carl Icahn’s put purchase immediately as markets ease back on the idea of more rate hikes ahead. On the other hand, a harsh CPI — one that comes in above expectations — will be equally as certain to tank the market, spelling victory for Icahn’s bearish activity.

Marketeers won’t have to wait around long to find out — the January CPI report drops first thing Valentine’s Day — Tuesday morning at 8:30AM EST.

That’s why Market Rebellion keeps a close eye on unusual options activity.

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