It’s still not clear who was behind Monday’s perfectly timed bets on stocks and oil that came just minutes before President Trump signaled a pause on Iran attacks – but the resulting windfall was likely worth between $40 million and $50 million, On The Money has learned.
Wall Street traders are now anticipating some regulatory scrutiny of the trades, which were made about 10 minutes before 7 a.m. ET on Monday – normally a lull in the markets. About 7,200 oil futures contracts changed hands with a value of $760 million, said veteran commodities trader Mike Khouw.
Around the same time, he said, there was frenzied buying of S&P futures – 6,000 contracts with an underlying or “notional” value of $2 billion.
Then came Trump’s 7:04 a.m. ET Truth Social post about “productive conversations” with Iran that sent crude oil prices down between 10% and 15% in the following minutes. Stocks, meanwhile, surged 4%.
It wasn’t just the timing of the bets but also their sheer size that immediately raised suspicions on Wall Street.
“People were definitely freaking out,” Khouw told On The Money. “We’ve all gotten our faces ripped off in the market but when something like this happens people get really pissed off since there was no real news that would foreshadow Trump’s posting.”
Khouw says he and other commodities traders believe whoever was behind the fortuitously timed action made off between $40 million and $50 million.
“You don’t know if this was one person or two or many,” he said. “What you do know is if they sold after the Trump post they made a lot of money. Not bad for 15 minutes of work.”
Another veteran trader summarized the trades in one word: “grift,” though there is no evidence of insider trading.
“All federal employees are subject to government ethics guidelines that prohibit the use of nonpublic information for financial benefit,” White House rep Kush Desai said. “However, any implication that Administration officials are engaged in such activity without evidence is baseless and irresponsible reporting.”
White House Counsel David Warrington said Trump has no involvement in business deals that would implicate his constitutional responsibilities.
It’s also certainly possible, said another, that legal market intelligence software might be behind the move as opposed to insider knowledge of the tweet.
“Trading algos seek patterns and maybe there was something that suggested there would be positive news coming out about Iran,” Khouw said.
On Friday, traders had noticed a large purchase of S&P futures during a down day in the market suggesting someone was betting on good news the following Monday. Khouw said there could be technical factors at play in Friday’s S&P futures buying, such as traders settling up positions as options expire.
The action on Monday, however, was far more “unusual,” he said.
“It occurred at a time when the market just isn’t that liquid,” Khouw said, meaning the trades stood out for their perfect timing and when other traders were on the sideline. “And then when the news came out it was off to the races.”
Experts said it’s possible the trades were done as part of a “mosaic” of information gleaned through completely legal sources and something additional — like a report in an obscure news source – led to the activity.
Press reps for the Securities and Exchange Commission had no comment. Reps for the Commodity Futures Trading Commission didn’t respond to a request for comment. Reps for the Chicago Mercantile Exchange where the trades took place had no comment.
While options are traded on places like the CME anonymously, without disclosure of counterparties, the ID can be tracked down by the CME and clearing houses.
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