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Market Shenanigans in RDWR Options

Radware (RDWR) has been a takeover spec play for the past few weeks, so it's safe to assume that there's going to be some option plays looking to take advantage of that. Wednesday we saw a strong spike on renewed rumors of a takeout that prompted a fast move on volume to the upside. It seems that a trader was "lucky" enough to put on some long exposure before the pop.

The Trade

At 1:40 PM, we saw a large trade put on-- 4500 Nov 25 Puts were sold at the .60 bid, and 4500 Nov Calls were bot at 1.20. This trade was put in on a spread so it's the same trader in this combination, and the open interest indicates it was an opening order. So we've got 9000 options traded by the same person on a stock that trades about 2400 contracts per day.

This is a fairly bullish position, that leaves the trader with a net delta of about 180,000 -- that means it's effectively long that many shares. On a stock that traded 2M shares, that's 10% of the volume today, so it's a fairly sizeable bet.

Here's how the stock traded that day:

The position, assuming no hedging is looking at a gain of $190k. Not bad for someone who clearly had "luck" on their side.

by Steven Place

Steven Place is the founder and head trader at investingwithoptions.com/