Wednesday’s trading day kicked off with news that 21st Century FOX had made an $80 billion bid on Time Warner Inc.?
Fortunately for an options trader, he was sitting on the right side of the trade, making a hefty $1 million in a week, reported the Wall Street Journal.?
On Wednesday, Time Warner?s shares rose 16% to $82.49 and then closed at $83.13, up 17.07%. Also during the day, the company made a statement saying that the offer by Fox “was not in the best interests of the company and its shareholders.”
Along with gains for its stock, Time Warner options have also been active. Rewind one week ago and it saw its most active options trading day in almost 20 months, as noted by Trade Alert data. This included a purchase of?2,200 call options, sitting ?in the money? if the stock rises to $80 during the upcoming three months–something last seen for this stock back on 2001.?
On that day, the stock had a?$72.41 close. And for the options trade that day with its?$175,520 cost, fast forward to Wednesday and it had a $1.3 million value.?
Brian Overby of TradeKing, said via the Wall Street Journal that the $80 ?strike? price was one of the more bullish contracts around during that time and added,??Out-of-the-money call buying is the one of the most speculative strategies in options trading. They went as far out of the money as they could. It was the highest strike up the chain.?