In a large and exceptionally well timed trade, one options trader was able to triple their money in just a matter of minutes—by playing a potential deal for Martha Stewart Living Omnimedia (MSO).
The Wall Street Journal reported Thursday that Sequential Brands Group is nearing an agreement to buy Martha Stewart's company for an undisclosed amount. That report sent shares of Martha Stewart Living Omnimedia 12 percent higher before the stock was halted.
Within seconds of the headline crossing the wire, but before the stock was halted, an options trader was able to purchase 2,600 call contracts. An estimated 1,600 of those expire on Friday.
Those volumes were atypical of the average day for MSO options, which sees only 50 call contracts change hands. Yet with today's news, 3,000 call contracts traded.
Once Martha Stewart Living Omnimedia reopened for trading, shares soared into the close. The stock finished up 22 percent higher, but those option increased in value even more.
The calls were bought on average for 30 cents per share. By the close, hours later, they were worth $1.10—a tidy paper profit of $208,000.