This past Tuesday, when Bear Stearns(BSC - Cramer's Take - Stockpickr)
was trading around $65 a share, there was huge put volume in the March $30
strike.
Over 55,000 contracts traded that day at an average price of
15 cents a contract. This is an extremely unusual trade in terms of the number
of contracts and how far out-of-the money those options were at the time. This
begs the question of why someone would execute such a transaction.
Those March $30 Puts are now worth $25.10 each. I think someone with a handle on how bad things were at Bear was able to put on some serious insurance. Or it could have been one of their counterparties who was getting ready to pull the plug on their trades and then rode the stock right down.
Too bad I didn't catch this trade because if I jumped on for a reasonable 10 contracts ($150) I could have made a cool $25,100. Of course you could have also taken billionaire currency trader Joe Lewis' side of the trade and took a $1 billion dollar smack in the chops as well.
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