The Indicator from Planet Money

Do traders who place big bets make big money?

February 24, 2026

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  • The volume of options contracts traded has significantly increased, particularly in the post-COVID era, partly due to the introduction of shorter-term options like weekly and daily contracts. 
  • Option whales use large bets for various reasons, including pure speculation, hedging/insurance to protect institutional portfolios, or as part of complex algorithmic trading strategies. 
  • Despite the size of their bets, option whales are not always correct, as demonstrated by a $74 million bet that ultimately lost money, and some highly profitable trades raise suspicions of potential insider information, particularly concerning political announcements. 

Segments

Defining Option Whales
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(00:00:27)
  • Key Takeaway: Option whales are traders or institutions making large bets using options, which grant the right to buy an asset at a set price by an expiration date.
  • Summary: Option whales place large bets, sometimes worth tens of millions of dollars, using options contracts. An option is the right to buy an asset at a specific price before a set expiration date. This mechanism functions essentially as a bet on the asset’s future price within that timeframe.
Growth of Options Trading
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(00:03:38)
  • Key Takeaway: Interest in options trading has exploded post-COVID, with contract volume increasing from 5 billion in 2019 to over 15 billion last year.
  • Summary: The market for options has expanded significantly, driven partly by the availability of shorter-term options, including weekly and daily contracts. This contrasts with past markets where traders were often restricted to one-to-three-month windows. This increased menu of choices allows for more frequent and shorter-duration speculation.
Institutional vs. Speculative Use
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(00:04:28)
  • Key Takeaway: Institutions frequently use options defensively to insure portfolios against catastrophic loss, while other traders use them for income generation or pure speculation.
  • Summary: For large institutions managing retirement funds, options serve as insurance to guarantee a selling price and prevent devastating losses. In contrast, traders like Mike Coe use options across multiple strategies to generate income, often relying on algorithmic trading rather than personal conviction.
Tracking Suspicious Activity
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(00:06:28)
  • Key Takeaway: Unusual spikes in options activity, especially on infrequently traded assets, can signal potential non-public information influencing large bets.
  • Summary: Services like Unusual Whales track sudden increases in options trading volume, analogous to a restaurant suddenly having a line out the door. The $74 million bet on Taiwan Semiconductor stock, which ultimately failed, exemplified a large, confident bet that proved incorrect, suggesting conviction does not always equal profit.
Political Trading Concerns
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(00:08:09)
  • Key Takeaway: Highly profitable, perfectly timed options trades preceding major political announcements, such as the tariff pause, raise suspicions of potential insider knowledge among political actors.
  • Summary: A $200 million profit was made on an S&P 500 bet just before President Trump announced a 90-day tariff pause via Truth Social. This timing suggests the trader may have known about the impending announcement, highlighting concerns about conflicts of interest. Legislation like the Stop Insider Trading Act aims to prohibit members of Congress from trading publicly traded stocks and options.