The stock market is teeming with tales of fortunes made and lost in the blink of an eye. Fortunately, this stock trader belongs to the former category, successfully converting a $200,000 investment into a staggering $4 million within a mere 40-minute timeframe.
This trader, dealing with the SPDR S&P 500 ETF Trust (SPY), successfully transformed an initial investment of $200,000 into a sum exceeding $4 million within a timeframe of less than 40 minutes.
The trader executed a purchase of options contracts with a strike price of 521 for a cost of 10 cents each while the SPY was trading at approximately 520, approximately 37 minutes before the market’s closure. Subsequently, the SPY experienced a rally, surpassing the 523 mark within the final 37 minutes leading up to the market’s closure.
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How this trade potentially unfolded
To better understand the trade, and how it unfolded, envision a scenario where a trader operates as a significant player in the financial market, either as a whale investor or a hedge fund manager.
A strategy involves purchasing a substantial volume of shares—potentially in the range of one to two million—of the SPY within the final 30 minutes before the market’s close. Assessing the depth of the order book and observing the ask and bid prices, the anticipation is that the price of the SPY will rise by 3 to 4 points by the time the purchase is completed.
Given this scenario, it may be prudent to consider acquiring 0-day-to-expiration (0DTE) call options at minimal cost before commencing buying activity. This strategic move allows leverage of the potential upward movement in the SPY’s price, potentially maximizing gains while minimizing your initial investment.
Could this have been an insider trade?
The likelihood of this acquisition constituting insider trading is supported by the possibility that the trader is a hedge fund or a significant investor. Before executing options contracts, they may have accumulated a substantial number of shares, thereby exerting upward pressure on the price of the SPDR S&P 500 ETF Trust.
Whether the trade followed this particular sequence or whether the trader possesses insider knowledge or holds significant influence as a whale, it doesn’t detract from the notable achievement of generating substantial profits within a brief timeframe.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
