The following is the OptionBT sighting of    "Rare Find".
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Title   :   "Rare Find"
Position Description  :
     Position taken   :     December 21,2006
     One year out,
     Vertical Bear Put Spread,
     Long the 07 Dec 1650 Puts (400 cnt), Short the 07 Dec 1640 Puts (400 cnt),
     No margin required,
     Close on the day of trade December 21,2006 was 1418.30
     Expiration/Settlement    :    December 21,2007 / Settlement = 1474.95

Count   :                     400 long put options, 400 short put options.

Credit or (Debit)   :     ($320,000)
Margin   :                   Non required.

Results   :                   Net = +$80,000


Comments   :   "Rare Find"

The only way this position will loose money is for the SPX to close above 1640 by 21 December 2007. It is curious that "RF" has placed this order exactly one year out from settlement. This is not significant. It does make the gain calculation very accurate. "RF" hopes to make exactly 25 percent on his $320k during the coming year.

At first glance you might think this is easy to achieve, but it's not.
This would be discounting the skill "RF" is demonstrating.

Look carefully at the bid, ask, and the last price in the figure above. The last price is what "RF" traded at. Had he bought at the closing ask and sold at the closing bid for the two puts, there would be no profit in this position.

The day of the trade was a down day. This was an opportunity to leg in.

You can try to set the spread you want into the automatic window and hope for the best. More than likely this will not give good results.

No, it is likely "RF" had a plan. He held the count down to 400 so that he could make a quick exchange without a lot of fuss. If "RF" did leg in, then "RF" had to buy $7.3M worth and sell $7.0M worth at the prices he had selected ( this gave a spread of $8 ). The point that has to be noted here is that the 07Dec1640 puts had not been traded before this date. This makes for an interesting point. Since "RF" is selling these puts for the first time, can he in effect open this strike for trading at an asking price of his own choosing? We can only speculate.
It would have been normal for him to have purchased the long puts before selling the short puts.

Since the SPX closed at 1416 on the day of the trade, "RF" is 222 points away from the place where his 07Dec1640 short puts will be overrun. This would require a 15.8 percent increase in the SPX over the coming year.

For each of the deep in the money put or call spreads like the one "RF" has offered us here there is usually one outcome. "They are all held until expiration." This was probably the case here and the settlement for December 21, 2007 shows that "RF" was never really in doubt. The trick was to get in with that $8 spread.
Those skilled enough to do that are a "Rare Find".

Side note:
   On the 27th of December 2006 another Rare Find (or maybe the same guy) showed up and did the same thing.
   He got a $7.90 spread for his 150 count on the same options. His net will be $31.5k.
   (Since the open interest on both puts increased, this was a new set.)
   Apparently someone else thought this was a good idea or maybe "RF" was at it again.

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