ARG - Takeover was Known in Options?

L

livevol_ophir

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ARG is trading 62.35 pre-market - up $20 from the close yesterday on an unsolicited cash bid from APD.

You can see ARG was the number 1 scan for call volume yesterday - "Unusual call volume relative to average." The company traded 1,712% of the average just in calls. The snapshot is in the article.

The company traded over 4,800 options today on total daily average option volume of 341. Further, 4,570 were calls for an 18:1 call: put ratio. The Company Tab snapshot is in the article.

The Options Tab and Trades snapshots are included in the article - someone bought the Apr 50 and 55 calls on opening open interest. .

Apr 50 Calls: Paid 0.35 and will be woth over $12 today.
Apr 55 Calls: Paid 0.10 and will be worth over $7 today.

Apr 50 calls profit: 1300 * 100 *(12-0.35) = ~$1,500,000 +
Apr 55 calls profit: 2000 * 100 *(7-0.15) = ~$1,400,000

So ~ $3,000,000 made in a day. How lucky?...

Details, trades, prices here:
http://livevol.blogspot.com/2010/02/arg.html
 
Quote from livevol_ophir:
So ~ $3,000,000 made in a day. How lucky?...
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The CBOE Market Surveillance Department should announce soon that proprietary traders at the investment bank representing ARG and APD will be arrested and disgorge their profits on those trades. :cool:
 
Quote from nazzdack:

The CBOE Market Surveillance Department should announce soon that proprietary traders at the investment bank representing ARG and APD will be arrested and disgorge their profits on those trades. :cool:
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I hear you... Innocent until proven guilty... but I hear you...
 
Why dont you show us how your options would have performed had you also traded the top 2-5 volume options. You often post stuff after the fact, which does not make your promotion really credible. You know very well that you would not make money over time simply buying the top volume calls or puts. So, picking one after the fact that actually did pay off sounds pretty lazy...to say the least...


Quote from livevol_ophir:

ARG is trading 62.35 pre-market - up $20 from the close yesterday on an unsolicited cash bid from APD.

You can see ARG was the number 1 scan for call volume yesterday - "Unusual call volume relative to average." The company traded 1,712% of the average just in calls. The snapshot is in the article.

The company traded over 4,800 options today on total daily average option volume of 341. Further, 4,570 were calls for an 18:1 call: put ratio. The Company Tab snapshot is in the article.

The Options Tab and Trades snapshots are included in the article - someone bought the Apr 50 and 55 calls on opening open interest. .

Apr 50 Calls: Paid 0.35 and will be woth over $12 today.
Apr 55 Calls: Paid 0.10 and will be worth over $7 today.

Apr 50 calls profit: 1300 * 100 *(12-0.35) = ~$1,500,000 +
Apr 55 calls profit: 2000 * 100 *(7-0.15) = ~$1,400,000

So ~ $3,000,000 made in a day. How lucky?...

Details, trades, prices here:
http://livevol.blogspot.com/2010/02/arg.html
More...
 
Quote from asiaprop:

picking one after the fact that in fact did pay off sounds pretty lazy...to say the least...
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My blog is designed to uncover order flow, vol, takeovers and other unusual issues (stock swaps, etc). It also focuses on using the Livevol Pro application to do analysis. By no means do I intend to predict movement or in anyway to offer advice.

I simply hope to illucidate how traders on the floor look at prop trades. A huge portion of trading is based on market making (not prop trades - but I can't blog on that).

Also, I post the trades I see that I try to commit to memory. I assure you that everything I post I discuss with a couple of other traders (at least). With rare exception, each one illicits a fairly serious discussion (in trade talk, that's 1 min or more).

Most times we do nothing, sometimes we do below. But everything that is in there is worth noting - or so I believe - otherwise I wouldn't bother anyone with it.

--- from a previous post ---
There is no average trade.

(1) Sometimes I see people paying up for options and I offer them to get what I perceive as edge based on my theo. If it's one line specific I can often times spread it off for a lot of edge because a kink develops in the skew on one strike.

(2) Sometimes I piggy back order flow but do the trade for better prices than the size.

(3) Sometimes I do nothing or pair trade. i.e. get same delta bet but pay less vega by combining (1) in the heavy trading stock and (2) in a highly correlated stock; where I am looking for the generic linear correlation, not any other rank.

Usually I just observe and remember the big bets. If they are winners twice, three times in a row in the same stock with similar bets, I go for strategy (2). If there is no reason to believe they are winners, I follow number (1).

Of course, many times, I do nothing b/c I do not perceive edge in either side.

Following order flow is rarely the obvious piggy back trade (though it can be). Trading is a game of memory. If you can't recall big trades 3-6 months ago in stocks you follow, you will have trouble trading.

Simple test: Can you remember the biggest trade you did every day of the week for the last 2 weeks even if things were uber slow? If you can't, it's probably trouble. If you can, you are probably making money trading.

----

Simply stated, the blog is my stream of consciousness throughout the day. I check hundreds of trades a day and try to remember 1-5 on average. I share 1-2 to two of those on the blog.

If you don't like the blog - say it, say it loudly and often if you must - but don't call me names. That's weak brother, pure and simple.
 
There are so many of these volume anomolies, I suspect you will make nothing playing them all.

Going back after the fact is not useful.


Lets see a backtest of buying ALL these volume spikes. Should be very easy to do.
 
Quote from livevol_ophir:

I know - just one time right... Oh well, back to scalping vol, it's the tortoise, not the hare...
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Maybe friend, but the hare has more fun!
 
Quote from stock777:

There are so many of these volume anomolies, I suspect you will make nothing playing them all. Going back after the fact is not useful. Lets see a backtest of buying ALL these volume spikes. Should be very easy to do.
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It's a virtual certainty that these are losers as a blanket strategy - otherwise the big banks would have figured it out already.

As a MM, most of the time there are "takeover rumors" and call skew bends up, I am a seller of the kink in the skew. I spread it off elsewhere as selling 0.20 options is generally not a good strategy to make a living either, but yeah - usually a sale rather than a purchase, totally agreed.

All the more reason I am suspicious of these purchases...
 
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