Best options trades
Remember, if options were to expire out of the money, they would be worthless, so this was an inherently risky trade. Originally, market participants thought the Altera options trade occurred moments after this tweet.
Intel is in talks to buy Altera. Deal would be largest in Intel's history. A well-perfected algorithm could easily make this trade in milliseconds, and this is a far more plausible explanation. Selecting a strike price and deciding to buying the calls at the mid-price or hitting the ask would likely take longer than 1 second.
Regardless, whoever or whatever placed this trade, unequivocally maximized the power of options. Is this one of the greatest options trades in history? But if its a high priced stock, I will only buy the option it gives me at least 25 times leverage or more on the stock.
Meaning divide the price of the stock by the actual option price. This means you want to buy options on stocks that have moved sideways of flat for months at a time. Look at a chart if there has not been a significant uptrend or downtrend in the last 3 to 4 months, there is a good chance that the volatility in the stock is low and the options are cheap.
Also if you have options software, you can compare the stock and its options implied volatility and underlying volatility to its historical implied and underlying volatility.
This may sound confusing but its the same premise value investors use, they buy stocks when they are cheap in comparison to what they historically sold for, so you want to buy options when the volatility is low or lower than what it historically has sold for.
This is very important, too many people buy options with no exit plan or profit target. You have to set a goal or sell point when you buy an option and to make it worthwhile from a risk reward standpoint.
Simply stated only buy an option when you have at least a 2 to 1 reward to risk scenario. Regardless, whoever or whatever placed this trade, unequivocally maximized the power of options.
Is this one of the greatest options trades in history? Amidst the chaos, there was an enormous amount of opportunity. Although most of the millions he made that day came from shorting Nikkei index futures, he made a quarter of a million dollars by selling overpriced put options to investors that panicked.
After closing out his short position in the Nikkei index futures, he noticed far out of the money puts were trading for a heavy premium. Shortly after he placed this trade, the Nikkei started to rebound and volatility collapsed.
The puts ended up expiring worthless and CIS collected more money from selling put options than most people will see in their entire lives. He is best known for his claim that six sigma market moves, i.