Sometimes, options trades carry tremendous risk for a seemingly minimal reward. For example, just look at the play initiated today in Intercontinental Exchange ICE – NYSE wherein a customer sold to open 20,000 ICE July 65 puts for $0.33 each.
These options expire in less than two weeks, so if ICE can remain above $65 by next Friday then our trader will collect all $660,000 in premium. That’s a high probability trade, but consider the downside.
The break-even price sits at $64.67, just 1.3% below current levels. Should ICE drop below this threshold, the losses start to accumulate at a daunting rate of $2 million for every dollar ICE melts lower.
Top 5 Imminent Mergers & Acquisitions: By tracking highly unusual options trades, we tip members to upcoming buyouts, M&A activity, and secret boardroom deals before the news is public. Some members have described it as “having a wiretap on every single company.” Click here for the top 5 stocks about to make some major headlines.