"Mystery Trader" Makes Huge Bet on DJ Eurostoxx 50 September Puts

There was quite a lot of rumbling on Monday about an "anonymous investor" that had made a very bold play on the DJ Eurostoxx 50 index, which is an index of Europe's top 50 stocks.

The investor bought a whopping 245,000 2,800 Sept 21 puts. With the index currently trading at about 4100, this would mean that the index would have to fall to 2,800 by the time of expiration in order for the puts to be profitable for this trader or hedge fund. This would mean a drop of about 33% for the index, which would be a massive drop in just a month for the top 50 stocks in Europe.

Most people speculated (and I would agree) that this is actually a hedge fund hedging itself against losses. I can not fathom an individual trader or investor making such a bold play in such a short period of time. This definitely smells like a fund that is blowing up to me, and they are desperately trying to hedge their losses.

Usually from my experience, "panic" trades such as this normally mark at least a short-term bottom. We'll see, I still found this story very interesting though, considering the size of the options position involved.

Filed under: General Market News

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