Amarin Corp Plc (AMRN)

[amarinbullfromchicago]

They’re not naked per se...they’re hedged. But pre event, they had to be long 20 shares per short $28 call and 80 shares per short 20 call (simplified, the formula is you have to be short the amount of shares based on the % the price will end above that strike value).

So now that we have dropped, they need to be short only 5 shares per $20 call and 1 share per 28 call....hence the massive sell off “due to the options.” If we would have rallied into Monday, they equally would have had to buy 40 million shares. One could even argue the price was slightly inflated due to the options market makers holding all the shares against their shorts, and then they quickly sold them out as the event proved to be a non upwards catalyst. With a large, effoeocnt stock, this wouldn’t be as big of a problem.

So they are not naked, just hedges of long stock are extremely small against the short options, and have been the reson for a good 20million sale of shares. To be air, they’re just following the formula their computers tell them, but are happy how it worked out.

Another fact- a market maker short the 19-23 call last Friday LOST money/didn’t hit a homerun on this move. They were holding long shares against their position and sold off slowly. I’m starting to think baker bros are selling, but that’s probably because I’m paranoid. I don’t know who else could cause this kind of sell off with naked shorts being restricted on Monday