Most Popular DWAC Option Eyes a 95% Plunge Over Next Month
- Traders buy $2.50 puts expiring in April as stock soars to $50
- Puts may be a hedge against other short options trades
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As share prices of the firm taking Donald Trump’s media company public soared on Monday, the most-popular option contract protects against the stock losing almost all of its value in just a few weeks.
While Digital World Acquisition Corp. soared 35% to $49.95, traders snapped up more than 15,000 of the $2.50 puts expiring April 19 — equivalent to 1.5 million shares, if the stock were to plunge 95% by then. While that kind of a bet is one possible rationale for doing that trade, there are other more likely reasons.