Trader pays $44 million for bearish S&P 500 put spread on October 6
The position on the SPDR S&P 500 ETF Trust pays off most if the fund drops about 35%, and was four times larger than the next-biggest trade.
By The Carnegie Standard Markets Desk
· 1 min read
An unidentified investor spent a net $44 million on October 6 on a large bearish options position tied to the SPDR S&P 500 ETF Trust, CNBC reported, roughly an hour into the session.
The position covered 100,000 contracts and appeared to combine the purchase of $61 million of March 655-strike puts with the sale of $17 million of 500-strike puts in the same expiration. It starts to pay off if the S&P 500 slides more than 18%, and delivers the most if the exchange-traded fund sinks to $500, about 35% below where it was trading.
The wager came as the S&P 500 returned to a record and the Nasdaq-100 traded 2% above its June peak after climbing 15% from a July low. Cboe's VIX briefly dipped under 15 on October 6, making hedges cheaper. "The vol is fairly low," said Brent Kochuba of SpotGamma, who added that March contracts were the least expensive in 90 days.
A larger trade surfaced in Meta options expiring in January 2029, involving the repurchase of $89 million of 560-strike calls and the sale of $69 million of 700-strike calls. Meta shares had gained 20% over the prior month.
This story was first reported by CNBC.
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