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Insider trade on Splunk acquisition?

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417 points mkmk | 4 comments | 21 Sep 23 15:58 UTC | HN request time: 0.632s | source
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xyzelement ◴[21 Sep 23 16:54 UTC] No.37600439[source]▶
I don't know if this is genuinely suspicious or not. Is buying 20K of options an unusual thing? Or is this something that happens regularly with options expiring worthless or with a small gain - and it just happened to hit big this time?

IE "someone bought a lottery ticket and won" - interesting to know if they play the lottery every other day (and don't usually win?)

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trowawee ◴[21 Sep 23 17:00 UTC] No.37600544[source]▶
"short-dated out-of-the-money call options that cash out a day after a merger/acquisition" is, like, the definition of a suspicious transaction. Somebody's gonna get a knock on the door from the SEC.
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1. jeffbee ◴[21 Sep 23 17:11 UTC] No.37600698[source]▶
But lottery-ticket options trading is done all the time. The fact that the options expire the next day is part of the strategy (because before that, the options cost more). $20k might sound like a big stake but you don't know the size of the trader's portfolio, it might be 0.01% of it, and they didn't stand to lose the whole thing necessarily.
replies(2): >>37600782 #>>37601051 #
2. trowawee ◴[21 Sep 23 17:16 UTC] No.37600782[source]▶
All true in the abstract. But doing it the day before an acquisition is always gonna earn you a door knock, even if you're a serial gambler.
3. ra7 ◴[21 Sep 23 17:33 UTC] No.37601051[source]▶
Yeah, this is not that suspicious IMO. The trade was opened yesterday when Splunk was at $119. They just needed a 7% gain by Friday to be profitable on their $127 calls. Traders make those kind of gambles all the time.
replies(1): >>37601116 #
4. TuringNYC ◴[21 Sep 23 17:38 UTC] No.37601116[source]▶
Not at this volume. Also, typically they do it for indices and typically based on some event (e.g., rate announcement), not on a heels of an unknown acquisition.