The following is the OptionBT sighting of    "Kodiak I & II".
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Title   :   "Kodiak I & II"
Position Description   :
     Position taken   :     Aug 04,2003; Aug 05,2003.
     Sixteen Months out,
     Two Deep in the Money Time-Only-Spreads,
     Long the 05 Jun 1250 Puts and Short the 04 Dec 1250 Puts,
     No Margin required,
     Long Puts in the money by 268 points on Close (Aug 04,2003).
     Expiration/Settlement    :    Dec 17,2004 / Settlement = 1190.45

Count   :                           {Part I} 5000 pairs   plus   {Part II} 4000 pairs   =   9000 pairs

Credit or (Debit)   :            {Part I} ($300,000)   plus   {Part II} ($240,000)   =   ($540,000)

Margin   :                          None.

Results   :                          Net = potential of upwards of $6M
                                        calculated using COB Thursday Dec 16,2004 bid and ask := $14,940,000.
Comments   :   "Kodiak I & II"
  Originally this sighting was thought to be "Bearish" and thus the name "Kodiak". This was entirely wrong of course. What is obvious now, took some time to figure out.

Time-only-spreads are so important to watch. They tell where this BigFoot is predicting the market will be. In this case "Kodiak" told us that the SPX will be at 1250 in mid December 2004. Keep in mind that this sighting is sixteen months away from the close of the short leg of the spread which is the 3rd Friday of December 2004. Remarkably, this prediction is made on a day in early August of 2003 when the SPX closed at 982.82.

Time-only-spreads work from the premise that the long side of the spread which is always further out in time will always be worth more. The theoretical ideal would be to receive for the 04 December Puts you sold short that which you paid for the 05 June Puts you bought long. Well, Kodiak comes close.

He is paying a remarkable 60 cents difference. (This translates to $60 for each pair of puts in this time-only-spread.) With a plan to purchase a total of 9,000 pairs over the two days and a willingness to spend $540,000 for the entire position, "Kodiak" has used his size to leverage a great price.
If you or I had put in an order with a 60 cent spread it wouldn't be filled.
However sour our grapes, this is a marvelous position.

"Kodiak I and II" Update February 6,2004 : SPX close = 1142.76
         If position closed at Current Value + $6,390,000 or up an unbelievable 1183 percent,
         yes, 11.83 times the initial $540,000 investment.

"Kodiak I and II" Update December 13,2004 : SPX close = 1198.68
         If position closed at Current Value + $14,670,000.

"Kodiak I and II" EndGame:
It appears from the volumes that "Kodiak" began the unwinding process for this huge position on the 15th of November 2004 with around 600 pair (bought the 04Dec1250 put to cover the short and sold the 05Jun1250 put to close the long). This was followed by around 1400 pairs on the first of December 2004 and then two more trys on the 15th of December for a pair total of around 3500 and finally on the last trading day which was the 16th of December 2004 with around 3500 pairs.

This brings home the point that getting in is one thing and getting out can become a little messy. After all you have to find someone to buy back those shorts. And the shorts are still deep in the money and not cheap. (ex: On the l6th of December 2004 the last price on the 04Dec1250 Put was $45.00 .)

Anyway you can be pretty sure that "Kodiak" didn't leave any crumbs on the table.

Even though I was mistaken at first and thought that this was a huge bear and called this BigFoot Kodiak, the name is appropriate due if nothing else to the size of the take home. The key to Kodiak's success was the price he negotiated. This shows us that being one of the biggest of your species has its advantages.

Congratulations Kodiak, you are the best.
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