|
|
|
|
|
|
by minimax
2887 days ago
|
|
|
All the transactions detailed in the SEC order are outright sales of stock (not options). He was both selling stock he already owned to avoid losses and selling short to generate additional profit. Before it was acquired, AFOP never had a very substantial market cap so it’s possible AFOP didn’t actually have listed options, or that it did but they weren’t liquid. I suspect that AFOP was probably a typical low volume small cap and that Li’s selling while not large in nominal terms was probably still pretty significant relative to the average daily traded volume. Large enough to be picked up by a pretty simple screen anyway. |
|
|
> improbably successful trading
Even before considering trading volume they can look at in-the-money trades as a proportion of total trades. Then I expect they would look at smaller denominators to see if timing correlated with the announcement cycle. The use of short-selling would have made it (relatively) easier still to pick up: assuming the company was ~200MM market cap at the end of 2014, of which 28% was held by management and their strategic shareholder [proxy statement 20150417], borrow could have been expensive enough to limit the holding periods of short trades.
As you and other commenters have pointed out, simple screens can indeed be effective. A short-term, infrequent trader (or small group of traders assuming, um, collusion) with a high win rate and presumably high risk-adjusted return would stick out.