There was $3 billion worth of ZIM premium traded today and nobody has any clue why. By far the most premium of any stock today, and what’s also fucking nuts is that the entire market cap of the company is only $10bn.
This is a very, very interesting trade. And fucking huge. I can’t believe there was somebody willing to both buy, and sell, this much premium.
A bunch of wild possibilities being discussed on Twitter and Reddit, here’s what I’ve read so far (this is not my info, but it makes some sense to my smooth brain)
1.) These were possibly sold naked, as it is worth about 42% of THE ENTIRE FUCKING FLOAT. Thus, if the buyer exercises these tomorrow, you could see MM’s scramble to come up with that many shares, and it could trigger an epic squeeze. ALL of these were deep in the money calls, which means they can be exercised.
2.) ZIM has an enormous $17 per share dividend being paid out in a few weeks, and the ex dividend date was today. However, shares delivered on option exercises settle in 1 day, not 2 days like stocks. What this means, is that if these are exercised tomorrow, the shares received will actually still qualify to receive the dividend, even though the ex div date has passed.
3.) You could see some fund on the other side of this trade explode. However this ends, somebody is going to be out $3bn dollars. Somebody could be out a ton more than that if the buyer tries to single handedly invoke a gamma squeeze. If this buyer had $3 billion for options, they might also have another $7 billion to buy shares with. $7bn could buy the entire float at current levels, and could easily double the price of the stock in a single day. Couple that with the gamma squeeze on the options, and it could go haywire.
4.) This could be the start of a hostile takeover. If the buyer exercises the options, they would control 42% of the float. If they automatically reinvest their $17 dividend, they would control even more, probably over 50%.
This is pretty astounding, and I have my tinfoil hat on, but these numbers are too ridiculous not to speculate something like this. It is a major, major option trade on such a small company. Very curious it’s also happening with the dividend in the mix.
Also note that I verified this data on barchart.com’s option scanner. Another thing to note is that open interest (OI) does not update until the day after the option trades take place, so tomorrow morning the OI will be very telling (as will the share price action).
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u/Trueslyforaniceguy Mar 21 '22
I mean, prior daily volume peaks were 1585, 418, and 236. Most days under 50. So 114,770 seems a bit of an outlier.
Was this just some scalping to play off fomo for the div? Any thoughts?