Wall Street Trader Up $2.4 Million After One Lucky Tweet—And I’m Off To Goodwill To Buy A New Suit

Last week an unnamed trader on Wall Street found himself $2.4 million dollars wealthier after he spent $110,530 on a call option to buy Altera stock, and a Wall Street Journal reporter sent out a tweet causing the Altera stock to spike. One tweet = $2.4 MILLION DOLLAR PAY DAY. Un-effing-believable. The details surrounding this suspiciously fortunate trade are a little hazy, but I’ll try my hardest to put them in a manner in which you can understand.

Above you can see the timeline (from the NYPost) by which the unnamed trader made $2.4 MILLION before the closing bell last Friday. The gist of it is simple: the trader purchased the call option to buy 300,000 shares of Altera at $36/share ONE MINUTE after Wall Street Journal reporter Dana Mattioli sent out this tweet:

Within 60-seconds of that tweet the unnamed trader had dropped $110,530 on the ‘call option‘ to buy 300,000 shares in Altera at the specified price of $36/share. Shortly thereafter Nasdaq suspended trading on Altera shares, but trading resumed and the shares closed that day at $44.39/share. The trader exercised his call option, purchasing all 300,000 shares at $36/share and sold them off for a net profit of $2.4 million.

If you’re not familiar with call options here’s the most chopped down definition possible: “An option to buy assets at an agreed price on or before a particular date.” So essentially after seeing that ONE TWEET from the WSJ reporter this trader bet $110,530 that it would pan out, and he got his (or her?) money in before trading was temporarily suspended.

Here’s the NYPost’s account of the $2.4 million pay day:

The unidentified Wall Street whiz paid $110,530 on Friday afternoon for the right to buy around 300,000 shares in computer-chip maker Altera at $36 a share, according to reports.
At the time, Altera was trading at about $34.76 a share, and the trader’s “call” options cost a measly 35 cents each because the stock ordinarily wouldn’t be expected to hit the $36 mark.
But within just 28 minutes, Altera shares had soared in the wake of a Wall Street Journal reporter’s tweet that the company was “in talks” to get bought out by Intel, reports said.
At Friday’s 4 p.m. closing bell, Altera’s price was $44.39 a share, up 28 percent.
By exercising the options to buy the Altera stock at $36 a share, then selling it for more, the trader made about $2.4 million in net profit, reports said.
Fortune noted on Wednesday that the extremely well-timed maneuver came less than a minute after the Journal reporter’s tweet at 3:32 p.m.
The tweet, along with a simultaneous headline sent out via the WSJ’s newswire service, prompted Nasdaq to suspend trading in Altera at 3:35 p.m.
But by then, the trader had already purchased the options and was on the road to riches.
Investment strategist Mike Khouw told CNBC there were several ways the trader might have been able to move so swiftly.
They include having seen the tweet at just the right moment, or having known about the possible deal ahead of time and reacting as soon as the news broke.
Khouw also speculated that an automated computer program — or “bot” — could have alerted the trader to the tweet.
“A bot is not as outlandish as it sounds,” Khouw told the cable network.
“Traders need to aggregate and filter through tremendous amounts of data quickly and will rely on technology to help if it is available.”

The thought that a simple bot could’ve netted some trader $2.4 million on a Friday afternoon is enough to make me go walk into traffic right now.

Furthermore, the fact that I had to learn what call options were before writing this blog is a sad reminder that I’ll never make a shitton of money in my lifetime. It’s just not in the cards for me. Even if I got the fieriest of tips I wouldn’t know what to do with that hotness. I am jealous of an unnamed man….

[The NYPost]