Huge trade looks for new highs in SPY
Chris McKhann | firstname.lastname@example.org
It is rare to find unusual option trades in the SPY, as the open interest is typically so large that it makes such identification difficult. But this morning a huge call spread stands out in the first April Weekly expiration.
optionMONSTER's Heat Seeker system shows that a trader bought 40,000 of the 158 calls for the ask price of $0.47 and, at the same time, sold the same number of the 159 calls for the bid price of $0.24. The volume was more than the previous open interest at each strike.
This vertical spread is looking for the SPY to be above $159 in the next three weeks. The trader spent $0.23 for the possibility to make $0.77--a $3.08 million payout. This could also be an example of using a call spread to replace stock exposure, as cited in this week's Options Academy newsletter. (See our Education section)
The SPY is down 0.4 percent to $155.40 this morning, coming off yesterday's high of $156.80. The exchange-traded fund is within its range of the last three days.