More Stories from the Floor: 5 of the Wildest Options Trades of All Time

[Image] More Stories from the Floor: 5 of the Wildest Options Trades of All Time Listen up — you’re going to love this… One of my favorite aspects of my years on Wall Street was the stories I heard. Insane gains, unfathomable losses, astronomic risk — you wouldn’t believe some of the tales that circulate Wall Street trading floors. But if you’re a close listener, these stories aren’t simply entertainment — they also provide priceless lessons about options trading. After all, if you wanna be the best … you’ve gotta learn from the best. A month or so back, I wrote about some of the craziest trading stories I’ve ever heard. But there’s more… With that in mind, keep reading and I’ll break down five more of the greatest trades of all time… 1992: George Soros and Stanley Druckenmiller ‘Break the Bank of England’ In 1992, the financial world was shaken by George Soros, an investor of almost mythical status. Along with a young Stanley Druckenmiller, he set his sights on the British pound, predicting its decline. Soros didn't just sell the pound; he aggressively bet against it by shorting the currency. To further amplify his gains, Soros also used put options so that he could eventually sell the pound at a predetermined price. His prediction proved correct when the British government, unable to maintain the pound’s value, devalued it. This dramatic event, now known as "Black Wednesday," resulted in Soros making an estimated [$1 billion]( showing the world the immense power of optionable currency trading. 2005: Takashi Kotegawa’s Infamous $17 Million J-Com Scalp In 2005, a Japanese trader names Takashi Kotegawa made history. He profited millions on a single trade in J-Com Holdings after its IPO on the Tokyo Stock Exchange. A trader at Mizuho Securities accidentally sold 610,000 shares at 1 yen each instead of selling one share at 610,000 yen. Ouch. The huge sell order sent the stock price crashing. And Takashi saw an opportunity… He bought 7,100 shares while the price was down. But he wasn’t the only one. The low price caught the attention of other traders and investors. A buying frenzy followed … Takashi sold part of his position into the bounce and held some shares overnight. By the end of the trade, he had made more than [$17 million](. But even more impressively, Takashi wasn’t a one-hit-wonder. Throughout his career, Takashi turned an initial investment of [$13,000 into $153 million](. 2014: David Einhorn Makes $430 Million on Micron Calls In 2014, David Einhorn, the founder of Greenlight Capital, revealed a bullish stance on Micron Technology (NASDAQ: MU). Instead of buying shares outright, Einhorn chose to invest in call options. This approach allowed Einhorn to control a more substantial number of shares than he could have bought directly, amplifying his potential gains. His strategy was a vote of confidence in Micron’s potential, and a move that showcased the power of options in amplifying investment outcomes. But what’s impressive is that he was right… MU started soaring, allowing Greenlight Capital to profit $430 million ([4.3% gains on a $10 billion portfolio]( in a single month. 2015: Mystery Trader Turns $110k into $2.3 Million in 28 Minutes In March 2015, a fast-acting mystery trader executed a remarkable play that turned $110,000 into a staggering $2.4 million … in 28 minutes. Don’t believe me? Listen… This windfall was a result of purchasing 3,158 out-of-the-money call options on Altera stock for $0.35 per contract. The trigger for this lucrative move was a news release announcing that Intel Corporation (NASDAQ: INTC) was in advanced talks to acquire Altera. Seemingly moments after the news broke, the trader made the quick decision to buy these options. The gamble paid off handsomely as the value of the call options soared to $7.60 each — [a gain of 2071%]( — in less than half an hour. Note that this trader could have been utilizing a sophisticated algorithm capable of rapidly analyzing news, Such an algorithm, designed to scan and interpret market-moving news instantly, potentially identified the acquisition news as a potential catalyst for a significant rise in Altera's stock price. Regardless, this incredible play is a testament to this trader's shrewd anticipation and their strong conviction in pulling the trigger as soon as the opportunity presented itself. 2020: Bill Ackman's $2.3 Billion COVID-19 Hedge In 2020, Bill Ackman made headlines with a hedge against market downturns due to the potential impacts of the COVID-19 pandemic. Ackman's Pershing Square Capital Management spent $27 million on credit protection for its portfolio. Then, Ackman made an [infamous CNBC appearance]( where he told traders and investors that “hell is coming” and suggested that “[Hilton], along with every other hotel company, is going to zero.” Unsurprisingly, this interview didn’t go over so well with the markets … but worked out beautifully for Ackman’s portfolio. As markets tanked in March 2020, Ackman’s hedge nearly 10x’d into a profit of $2.6 billion. While his news appearance was controversial, there’s no arguing that Ackman was right to hedge his massive portfolio as soon as COVID-19 became a reality. Closing Thoughts Aren’t those trades INSANE?! Just writing about these plays gets me so inspired to crush the market. Additionally, these stories illustrate the power of options trading… When executed with precision, foresight, and discipline — options can lead to outsized returns compared to common shares. Trade accordingly. And, as always… Trade Street Smart, Jeff Zananiri P.S. 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