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# This Shit Is Rigged

#### Options Trading 101 - The Ultimate Beginners Guide To Options

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by Gavin in Blog

I had an email today from a reader asking about some AMZN calls that traded yesterday. I was a bit intrigued by the email so I thought I would look into it some more. Here is the email:

“Hello, I want to see what your thoughts are on this trade, what can I learn for it if anything? On 11/13 a trader bought 7000K \$300 Strike calls that expire on January 2017 for \$71.90 each. That totals \$50,000,000 The break even price for this trade is \$371.00. At that time AMZN would have to rally 18% to make money. Any thoughts would be appreciated. Thank You”

Bringing up the time and sales information, I can indeed see the 7,022 calls being traded on Thursday, but I also see another 7,176 being traded 4 minutes before then. In fact, the majority of the days trades in this strike occurred within a 4 minute window.

Just running the numbers here each options contract was worth \$7,190 and multiplying that by the 14,198 contracts we get \$102,086,620. Yes, that’s right \$102 million. The actual notional value of the trade would be the number of contracts x the strike price x 100.  That would be \$425.9 million. Not a small sum by any stretch of the imagination

So a large trader placed a \$425.9 million bet on Amazon between 11:23 and 11:27.

Guess what happens 15 minutes later?

Surprise, surprise we have the news that Amazon has reached an agreement with Hachette.

From what I can see Business Insider broke the news at 11:42. Interactive Brokers shows the news story at 11:47. I can’t find any evidence that the news was released anywhere else earlier than that. CNN Money “broke” the story at 12:46.

It’s interesting to note that the price of Amazon didn’t move much after the news release, but maybe it took a little while for the general public to catch on.

Today, AMZN was +3.50%.

Those Jan 2017 \$300 calls, traded as high as \$81.70 and finished the day around \$78.50. Let’s do some math.

### What’s 14,198 contracts x (78.50 – 71.90) x 100 ?

Just a cool \$9.37 million in profits. Not bad for a days “work”.

Probably nothing will even come of this, but clearly something shady went on here yesterday. This industry is so crooked and corrupt that it makes me sick. Please share this if you agree.