Donald Trump is a significant owner ofTrump Media & Technology Group(DJT) shares. This publicly traded entity operatesTruth Social, a pro-Trump social network in which Mr. Trump owns78.8 million shares. The network's business plan is to be the hangout for like-minded Trump fans who want to be the first to read their favorite politician’s announcements and socialize.
Like other stocks, many people buy and sell shares of DJT for various reasons. However, an interesting financial bet stands out. A little-known private financial firm reported initiating an unusually large short position by buying put options for the nominal amount of 12,000,000 shares.
So, on July 12th,a day before the assassination attempt, Austin Private Wealth reported a short position nominally equivalent to 12 million shares.It is huge: it represents approximately one-seventh of Trump’s ownership in the same company, or 16% of all available stock float not held by major insiders.
Is that a big deal? For my nonfinancial readers, here is a little introduction to puts. Austin Private Wealth's position is in put options. Puts are financial instruments whose holder receives a payment if the underlying stock falls below the agreed price (the strike price) by a certain date. In such a case, the put option holder receives the difference. The more the stock falls, the more the put holder gains.
The standard American contract size is 100 shares, so Austin Private Wealth held approximately 120,000 put options, exposing it to potential gain linked to 12,000,000 shares of $DJT.
A sudden demise of Truth Social’s central figure, Donald Trump, would make the$DJTstock worthless, making Austin Private Wealth a beneficiary of a gigantic payoff. Depending on the strike price, it could be a couple hundred million dollars.
What do we know about this odd financial bet? One thing to note is thatit was made sometime before it was reported on the 13F filing: form 13F must be filed after the end of a quarter, and in this case, refers to the position as of the end of the second quarter, or 6/30/2024.
Austin Private Wealthis a money management firm catering to well-off individuals. Therefore, it is possible that the idea of initiating an unusually large put position belonged to one of its clients or just one money manager. Here’s the picture of their top managers, so you can play a guessing game of which of them possibly came up with this idea:
It is also plausible that this extremely unusual position is acoincidence. There are many reasons why TruthSocial does not have a bright long-term future. However, the timing of this unusually large put option purchase raises some questions. Had the assassination succeeded, Austin Private Wealth would have had a windfall! The only reason Trump is alive is that he turned his head away in the last split second.
I am not new to options trading and made some money from Moderna puts that I purchased in 2021. People buy and sell options for all kinds of reasons. However, Austin Private Wealth held a position far beyond the size of typical speculative put positions.
What do you think? Is a giant put position, which would benefit from a sudden drop in DJT stock, initiated so close to the assassination attempt, just another unrelated coincidence?
