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Insider trade on Splunk acquisition?

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417 points mkmk | 2 comments | 21 Sep 23 15:58 UTC | HN request time: 0.413s | source
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bryan0 ◴[21 Sep 23 17:23 UTC] No.37600873[source]▶
Can someone explain the mechanics of this specific trade to a noob? The trader bought 550k options yesterday for SPLK to hit $127/share? Since that seemed highly unlikely they were only priced at $.04 each. but now that SPLK is at $145/share they are worth $18 each? so that would be a profit of ~$10m?
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1. adocomplete ◴[21 Sep 23 17:29 UTC] No.37600984[source]▶
You pretty much explained it yourself.

The price of SPLK had no reason to jump to or beyond $127 without some catalyst event so the options were almost worthless. But with the acquisition, the stock had a catalyst and with the share price jumping to $145, those options gained a crap load of intrinsic value (basically the difference of $145 - $127).

Now either the purchaser got really really lucky or had insider information that the acquisition was going to happen. The latter seems much more likely.

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2. myself248 ◴[21 Sep 23 19:42 UTC] No.37603087[source]▶
> without some catalyst event

Most subtle Cisco joke in the whole thread. Hat tip.