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by mmahemoff
1007 days ago
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They bought $127 call options (the right to buy Splunk at $127) while Splunk was valued at $119 and the options were due to expire in one day. That's a cheap option to buy, given the improbability of a sudden jump like that. The only way the buyer could make a profit would be for Splunk to go higher than $127 and if it went significantly higher, they'd stand to make an eye-watering return-on-investment multiple in one day. Which is what happens. It would be suspicious if this turns out to be a speculative trader making a one-off transaction. |
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Calls are the right to buy at $127 - the shares received can then be sold at market price.
Puts are the right to sell at $127 - the short position can then be closed by buying at market price.