$850K Unusual Call Options Bet: Insider Trading on Tariff Again?

Last week, the US stock market experienced a rollercoaster ride, ultimately ending with a rebound across the three major indices. The $DJIA(.DJI)$   rose by 4.95%, the $S&P 500(.SPX)$   gained 5.7%, and the $NASDAQ(.IXIC)$   climbed 7.9% over the week, with semicondutor and consumer electronic leading the way up. The safe-haven asset gold $Gold Futures(JUN5) (GCmain.US)$ reached a new high, closing the week up 6.5% and surpassing $3,250. The bond market faced selling pressure, causing the 10-year Treasury yield $U.S. 10-Year Treasury Notes Yield (US10Y.BD)$ to surge by 12%. On the one hand, two Treasury auctions earlier this year did not meet expectations, and hedge funds reducing their positions indicate heightened concerns about interest rates. On the other hand, weak demand from international markets and the risk of some countries potentially reducing their U.S. Treasury holdings are also causing anxiety among investors amid tariff turmoil.

Big Option Bets: Coincidence or Insider Trading?

The markets are buzzing with speculation following a well-timed and substantial options trade made shortly before a significant policy announcement. On the last Friday, just 2 minutes before the market closed, an trader placed a bet of $850,000 on 1DTE call options on the S&P 500 ETF, with the strike price of $554, set to expire the this Monday. Such a large, high-risk bet would only make sense if the buyer was certain of positive news over the weekend. After the market closed, the U.S. government announced tariff exemptions for electronic products, a move that was expected to benefit the stock market.

This isn’t isolated. Similar spikes occurred in options of Chinese stocks $PDD Holdings (PDD.US)$ before delisting rumors. The Trump administration is reportedly considering the delisting of US-listed Chinese company. Notably, a significant trade involving $1 million long put options on $PDD Holdings (PDD.US)$ with a one-day expiration emerged earlier, drawing attention to unusual market activity.

Senators Call for Investigation

The first piece of news that caught the market's attention was last Wednesday when a trader made a 200-fold profit by betting on a 90-day tariff pause with 0DTE options of Nasdaq ETF. These well-timed trades have caught the attention of market participants, who are now increasingly vigilant about potential insider trading.

Event-trade is risky but common, but when huge sums target ultra-short-term options, it’s hard to ignore the timing and insider trading.

Amid the controversy, U.S. senators have urged the SEC to investigate whether Trump's tariff decisions benefited insiders. There is a growing concern about the potential monetization of presidential power, with critics pointing to various avenues through which Trump and his associates might profit.Some Democrats have called for investigations into potential market manipulation or insider trading. The White House did not directly address the allegations of market manipulation but emphasized the president's role in reassuring the markets. Meanwhile, the SEC has not commented on the situation, though it has acted against insider trading in the past.

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