The following is the OptionBT sighting of
"Strong to the Hoop".
Go to Description Section
"Strong to the Hoop"
Position taken   :     April 24,2003
Position Description   :
12 Months out,
Uncovered Short Puts for "credit",
Shorts above the the money by 39 points at the close of the day.
Sell 04 Mar 950 Puts (5800 cnt).
Expiration/Settlement    :    March 19, 2004 / Settlement = 1120.18
5800 uncovered put writes
Credit or (Debit)   :
$551,000,000 (at 100%) ... or $215,588,820 (using my broker's formula)
profitable @ SPX above 950 will be $52,780,000
Comments   :   "Strong to the Hoop"
Is this boldness or March Madness on the part of "Strong to the Hoop"?
It is hard to say. The owner of this position is really flexing some muscles here
in a strong move. Due to the large premium he received ($9100 per count) the SPX
could close as low as 860 and "SH" would still be in the black.
This is high handed stuff. The Open Interest
a few days later shows that all these shorts are not completed covered, but there is ample
time for the market makers to cover it. It would be interesting to know the dynamics of this
position. I am trying to imagine who would take the other side of this position.
Could it be a fund which is willing to pay $52M+ for a hedge? If a fund was so poorly
managed that it needed this kind of support, I would dump it immediately.
BigFoots like "SH" are the very interesting indicators.
This one is a long term thinker having established this position in April of 2003 and
is willing to give the market almost a year (until March of 2004) to prove him correct.
Having reviewed the data though, I think "SH" did hold into 2004. There are
only a few days that show enough volume which would indicate that "SH" got out.
The most likely candidate is March 05,2003.
If this was the exit point then "SH" bought back the $91 shorts for $0.15 (15 cents) each.
The SPX was around 1150 then and the next few days were heavily down. "SH" probably thought
that the extra 15 cents that he would have made if the puts expired worthless
wasn't worth waiting for.
During the duration of this postion the SPX was mostly up.
"SH" would have been safe if he held to the end. The March 2004 settlement
was 1120.18 and his puts were out of the money by 170 points.
The remarkable thing to note in hindsight is to look at the settlements for the months
following the establishment of this position (April 2003). February 2003 was the lowest
settlement since before 1998 (this is where my records start).
Somehow "SH" sensed that the market
had turned from this historical low and was heading for a recovery.
"Strong to the Hope" wasn't mad after all. He sold the in-the-money puts short and a year later
took home $52M+.
Just a footnote about the exit. How did "SH" know that the SPX would drop almost 50 points
starting the day "after" he covered his short puts? Not to worry "SH" was so far out of
the money by then that it is hardly worth discussing.
Any way you look at it "Strong to the Hoop" is on top of his game.
Apparently his salary for this year was $1M per week.
back to BigFoot Hall of Fame page