What can I do about insider trading activity in stock options that cause financial harm?

[JackRab]

Yes, Take responsibility for your trades and don't play the victim like Joezapped.

Exactly. If there was 1300 OI in this put, this might as well been to cover risk.
Prof firms look at 30-50-80% gap down. 10-30% up. If they needed to cover any excess risk due to short puts, this can just have been a quick fix at low cost.
A lot of MM don't allow short OTM positions in the week of expiry (for a good reason).

Also, maybe it was insider, but maybe there was just talk of something brewing... happens a lot. Brokers talk etc. And then someone just wanted to cover for risk. This is not considered insider trading. Especially if only a few hundred were traded.

In my professional career as MM I saw trades like this happen weekly. To prove it is very hard.... unless you're talking about someone trading several thousand... x times open interest, opening a position.

Some firms even have the tendency to give statements ahead of official dates. SAP used to be almost notorious for that.

 

[JackRab]

I know I should take responsibility, and am, but how do I avoid this? Do you have any suggestions?

You can't really cover for insider trading on it's own.
But if anything, proper risk management is the way to go. Look at big gaps, up and down. Don't just stop at 10%... Look at 30-50%. Those gaps are not even really black swans... not in single stocks. See what you loose in that case... if you're comfortable with that, then stick with it. If you get that wheezy feeling in your stomach... close out.

 

[ferrycorsten]

Ummmm...did you see that I'm doing this a long time, I do it for a living, and that I'm very successful with it? I guess not. I could teach you how to improve YOU'RE trading! I just came on here to get insight on regulatory process. Thanks for nothing, though...

Where do you work? Bluefin? Optiver? Or your living room? I didn't miss anything, because you haven't provided any evidence to back up your claims, and the fact that you "do this for a living", yet you need to come to ET to understand market microstructure and insider trading is a joke.

 

[JackRab]

Where do you work? Bluefin? Optiver? Or your living room? I didn't miss anything, because you haven't provided any evidence to back up your claims, and the fact that you "do this for a living", yet you need to come to ET to understand market microstructure and insider trading is a joke.

Of course he doesn't work for a prop trading firm like that... he's an option seller... whatever that means...
And otherwise he'd be smacked in the head for selling something short like that, or at least for complaining afterwards for it being 'not fair'.

 

[ironchef]

You can't really cover for insider trading on it's own.
But if anything, proper risk management is the way to go. Look at big gaps, up and down. Don't just stop at 10%... Look at 30-50%. Those gaps are not even really black swans... not in single stocks. See what you loose in that case... if you're comfortable with that, then stick with it. If you get that wheezy feeling in your stomach... close out.

Thanks. But every time I entered into a short trade, I got that wheezy feeling in my stomach that it would go really bad. So now I seldom go short.

 

[joezapp]

Where do you work? Bluefin? Optiver? Or your living room? I didn't miss anything, because you haven't provided any evidence to back up your claims, and the fact that you "do this for a living", yet you need to come to ET to understand market microstructure and insider trading is a joke.

You want evidence for what claims? And where do you come up with saying that I "need to come to ET to understand market microstructure and insider trading"? I came here to get insight on regulatory process. Nothing more. This turned into a lengthy discussion with a lot of parties, but the first responder answered my question in his first line. I don't mind having the discussion. People have put in the time to join in. But don't put your own twist on it.

 

[joezapp]

Yes, Take responsibility for your trades and don't play the victim like Joezapped.

I thought you had a change of heart after your first rude off-the-wall comment, and, being the nice guy that I am, I welcomed you back. But there you go again. I'm far from a victim in the game of option selling. Let me be clear on that. You have absolutely no idea. MOVE ALONG.

 

[RRY16]

I thought you had a change of heart after your first rude off-the-wall comment, and, being the nice guy that I am, I welcomed you back. But there you go again. I'm far from a victim in the game of option selling. Let me be clear on that. You have absolutely no idea. MOVE ALONG.

Change of Heart? Welcomed back? The longer you keep this thread going the more people realize what a hack you are so let's just put an end to this...your like the person at the soup kitchen who complains about the soup being to salty.

 

[joezapp]

Thanks. But every time I entered into a short trade, I got that wheezy feeling in my stomach that it would go really bad. So now I seldom go short.

I don't think JackRab was talking solely about shorting, but shorting is tough. The biggest force going against you is that the long-term trend of the market is up. I only short during periods of historically weak market seasonality. But even then, some stocks resist the downtrend and hold up rather well. Also, some brokers charge to hold short positions overnight, and some stocks carry "hard-to-borrow" fees, all of which adds more length on the bridge to profit. And, of course, a stock can only go down to zero, but there's no limit to how high a stock can go. I wouldn't say to never short, but I would say pick your spots and do it sparingly. Also, know your exit point should the trade go against you, and stick with it.

 

[joezapp]

Change of Heart? Welcomed back? The longer you keep this thread going the more people realize what a hack you are so let's just put an end to this...your like the person at the soup kitchen who complains about the soup being to salty.

I haven't complained even once. The only hack here is you. This is Elite Trader. You're in the wrong place. Go back to the Yahoo boards where you belong, troll!