04-18-2013, 02:05 AM
This is just my opinion but I'm guessing the person sold both the calls and the puts betting that the stock would trade within a range for the next several weeks. Whoever is doing this has done this MANY times in the past and has probaby made a ton of money doing so. if this is the case it could come back to bite the person in the ass should they not close out the positions before the SD as losses increase exponentially very quicly on big moves either up or down. I have my thoughts on who it is but I'll refrain from pointing fingers.
The only other strategy I could see is a synthetic long position which would be selling the puts and buying the calls. If this is the case which I doubt it is a HUGE sign. Many HF's and traders use synthetic longs via the options market in order to "cost efficiently" replicate being long the stock. This would be, in my opinion, the most cost effective way for a big short to hedge their position without covering. If that is the case hold out to your hats bc if these options do get exercises someone is going to have to come up with a lot of shares.
Once again this is all just my opinion
The only other strategy I could see is a synthetic long position which would be selling the puts and buying the calls. If this is the case which I doubt it is a HUGE sign. Many HF's and traders use synthetic longs via the options market in order to "cost efficiently" replicate being long the stock. This would be, in my opinion, the most cost effective way for a big short to hedge their position without covering. If that is the case hold out to your hats bc if these options do get exercises someone is going to have to come up with a lot of shares.
Once again this is all just my opinion