FACTOID 4 RESIDENT SHORT/ ID.I.OTS 11,409 JAN 2.50 CALLS
PURCHASED TODAY of all days?
ONLY 5 DAYS LEFT UNTIL EXPIRATION, BUT WHY?
The buyer LIKELY already owns a significant portion of the 68,000 EXISTING CONTRACTS SHOWN IN THE OPEN INTEREST (of the JAN 2.50 2013 Calls).
The thing that makes this little "bet" out of the ordinary, is its effect upon the normal assumption of "MAX PAIN". The gravitational effect of the "Max Pain" threshold is so widely known and accepted that it usually becomes a self fulfilling prophecy, but in this case, that's not likely. This situation is quite a bit different for 2 reasons:
1) The purchase comes extremely late in the contract. (surprise!). The timing is suspect and invalidates the usual motives of the large players; to collect premium.
2) The fact that these calls are IN-THE-MONEY! (there IS no PREMIUM to take!)
LET ME ASSURE YOU OF ONE THING: THIS SALE WAS NOT ARRANGED TO PROVIDE PREMIUM TO THE SELLER!!!. What we're most likely seeing is the setup for an extremely high leveraged, spring loaded attack on the short camp beginning EARLY MONDAY MORNING.
Sure, .13c doesn't sound like much, BUT hypothetically, lets just SAY the buyer owns 40k of the existing Jan 2.50 CALL FLOAT, well that person now owns at least 50,000 call options that are IN THE MONEY!!! GET IT? IN THE MONEY - SAME AS CASH - but with a 15:1 LEVERAGE OVER CASH. THAT IS A LOT OF WEIGHT TO SWING AROUND DON'T YOU THINK?
Well now you're looking at a nice little incentive to BUY and KEEP BUYING, because every penny the Buyer drives this stock higher, it's going to be realized that by a factor of 5 Million (50,000 contracts). In other words, .every .20c translates into a million to the buyer.. in cash!
Think about this Mr. Odonnel. Try to get some sleep, but grab your ankles come Monday AM. This is going to hurt you more than it hurts me.
I think you are correct in your analysis, and it will be the options folks at play. A little short term pain is due for the shorts, but tut, tis but a scratch in the grand perspective.
There is one major caveat. What if by chance that intangible, Karma Yoga, comes into play? Then we will be talking about real excitement. You shall reap that which you sow. Unfortunately, these things never occur on my own personal schedule. Long term, they will unfold, which is why patience is the most critical of qualities. Primary trend baby!!