Who Negotiated A Trade Of 10,000 Contracts With A Small Cap?

J

JesseJamesFinn1

How do large orders above 5000 Calls get worked when your not buying chunks yourself to flip? Its hard enough to sell 1500 or 2000 showing size on Facebook or Apple Weeklies, they do not go through this smooth. A few weeks ago someone posted over 5000 FB Weekly Calls and it took about $.18 above price to get those out of the way. I took out a chunk to help create action, how do you get this big, the FB Calls I bought were easy to grab because they were posted.

Who take's the other side because this stock get's chaotic when large option buyers enter. Today someone bought 10,000 September $32.50 while selling 10,000 December $35s. Its at the target of the analyst range of $30 so I've sold most of my lower priced contracts. Which Investment Bank will sell you 10,000 Calls and Buy them at the same time? Ticker is A-L-R-M.
 
FB when that block was eliminated moved up $.15 immediately and continued up its path making new highs. I promised to reduce my option size to allow the options to continue moving up. My Facebook trade was easy enough to get rid of using a Reserve Book and the correct exchanges. The Trader with Facebook used Nasdaq, is that to get Exchange Rebates if they even provide them?
 
Looks like the 10k lot was the Sep 30s @ 2.27 and the Dec 35s @ 1.29 based on TOS's time and sales.

I honestly don't know the answer to your question, but you brought up some old memories of gamma scalping. We would buy the puts first, knowing the market maker would sometimes instantly hedge his short puts with short stock, and we'd buy on the quick dip. It probably saved us a few pennies over the long run. Possibly none. But it was fun.

Anyway, I hope you get some good responses on this. Definitely interesting.

JNB
 
Well I appreciate this stock going up after those block trades, maybe Jon and Pete are not so wrong about adding if they hold a stock when crazy blocks happen? It happened on my HAIN on Friday early on with large blocks blasting around, I call them a Sign.
 
They are shopped around, most probably with IDB (who in turn will show to layoff accounts). The price is usually set off delta execution, so if the delta block moves the stock it does not matter. Also, you never actually know the real price where it traded since the exchange print is usually off-market. Anyway, what really matters is the negative selection bias (a.k.a. winners curse) and massive information asymmetry vs the counterparty.
 
The Boys were back in town buying the $25 September Calls with excellent size. Why are they buying September and the $25s only one month? I wonder what is going on with ALRM because the size of the Calls are not chump change. They drove the price of ALRM from $27.5 above $28 because of the MMs having to buy the physical in the open market.


Is there a reason why when a person is buying a stock such as ALRM the Option Market Maker will hold your order:

Bid x Ask $3.00 x $3.60 eventually the Bid x Ask were $3.60 x $3.60 as the Option Buyer bid above the current offer.


There are times I buy or sell and right before I buy the OPRA Level 2 will show the exact same size of my trade on the offer and fill it. To describe this further, imagine the Level 2 Option Quotes are showing $3.00 x $3.40, I bid for 30 contracts at $3.20 and the Level 2 shows 30 contracts at $3.00 x $3.10 and my order gets filled at $3.09 to avoid paying Exchange fees? Why does the Size pop up right before our order is filled? Did my Market Maker decide to fill the order at $3.09 even though for a second the offer showed $3.10 with 30 contracts usually on BATS or EDGX it happens.
 
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