In a new twist to the story of a widespread IT outage that affected devices across the planet, caused by a CrowdStrike (NASDAQ: CRWD) update related to Microsoft (NASDAQ: MSFT) systems, it appears someone had made a massive $2 million dollar put bet on CRWD stock right before it happened.
Specifically, just two days before the outage, someone had placed a $2.3 million dollar put bet on CRWD with a strike price of $370, expiring on January 17, 2025, as per the information shared by researcher and interviewer Josh Walkos, a.k.a Champagne Joshi in an X post on July 23.
As a reminder, put stock options equal to betting that the stock price will fall, which means whoever placed them is bearish on the stock, as opposed to calls, which refer to a bet that a stock will rise and reflect a bullish conviction.
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Coincidence or something else?
According to Walkos, the likelihood of this being just a bizarre coincidence was “extraordinarily low (…) in the context of the outage and subsequent price drop,” arguing that this proves that “someone knew something was coming.” As he further pointed out:
“It’s like flipping a coin and getting heads 25 times in a row. It’s akin to winning a major lottery jackpot multiple times in [a] row or predicting the exact moment and location of a meteor striking the Earth. 7.22 times the standard deviation from the average. It’s a big deal.”
Indeed, the researcher had earlier posted data on a purchase of an “unusually large block of put contracts for CrowdStrike, valued at approximately $2.3 million, just 2 days before the outage that caused network failures worldwide and grounded planes.” As he said:
“These contracts had a strike price of $370 per share and were set to expire in 184 days (January 17, 2025). The premium spent on this trade was 7.22 sigmas above the mean, placing it in the 100th percentile of all recent large trades in CrowdStrike optionally. This level of sigma indicates an exceptionally rare event.”
Furthermore, he noted the significance of the outage timing, which happened on a Friday, “as it allowed the news to spread over the weekend, giving investors and analysts time to assess the situation before markets reopened,” adding that the “weekend gap likely contributed to the continued decline in stock price when trading resumed.”
Interestingly, CrowdStrike’s chief security officer Shawn Henry had sold 4,000 shares of CRWD stock on July 15 in a transaction totaling approximately $1.49 million, according to a filing with the United States Securities and Exchange Commission (SEC), as Finbold reported on July 20.
CrowdStrike stock price analysis
Meanwhile, the price of CRWD shares at press time stood at $267.27, reflecting a decline of 5.70% on the day, adding up to the more substantial dip of 29.28% across the past week and losing 29.41% in the last month, albeit making a modest recovery of 1.24% in pre-market.
Elsewhere, some Wall Street analysts have adjusted their CrowdStrike stock forecast price targets, citing the recent global disruptions caused by the leading cybersecurity firm, although acknowledging it has significantly grown its technology offerings and aggressively targeted new markets.
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