Do traders who place big bets make big money?

Summary

Podcast Summary: The Indicator from Planet Money

Episode: Do traders who place big bets make big money?

Date: February 24, 2026
Hosts: Waylon Wong (NPR)
Guests: Ricky Mulvey (Co-host, This Time is Different), Amy Wu Silverman (Royal Bank of Canada), Mike Koh (Open Interest Pro), Matt Sankom (Unusual Whales)

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Episode Overview

This episode delves into the world of “option whales,” the traders and institutions that place massive bets on the stock market using options contracts worth millions—sometimes tens of millions—of dollars. The hosts investigate who these whales are, what motivates their colossal trades, and whether big bets reliably deliver big profits. The conversation highlights not only the mechanics of the options market but also the intrigue and suspicion that arise from outsized trades, especially when these bets coincide with major news events.

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Key Discussion Points and Insights

1. Introduction to Option Whales

• Definition: Option whales are individuals or institutions that place extremely large options trades, betting on the future price of stocks or other assets.
• Nature of the Bets: “They're not necessarily buying a stock itself. They're buying the right to buy an asset, like a stock... It's essentially a bet on what the price will be within that timeframe.” — Ricky Mulvey (00:31)
• Scale: Recent examples include a $74 million single bet on one stock.

2. The Boom in Options Trading

• Phenomenal Growth: U.S. options trading volumes tripled from 5 billion contracts in 2019 to over 15 billion by last year (03:40).
• Market Evolution:
  • There are now weekly and daily options contracts, versus longer one to three month terms in the past.
  • This allows whales and other traders to speculate with much shorter windows (04:14).

3. Why Institutions Use Options

• Risk Management:
  • Large investors (like pension funds) use options to hedge against catastrophic losses, essentially “buying insurance” against a market crash—ensuring they can sell at a preset price if the market drops (04:21–04:37).
  • “They think about their portfolios that way because for a lot of institutions, that money that they're protecting is one day going to be for someone's 401k or someone's pension plan, and they have to make sure that it's there.” — Waylon Wong (04:45)
• Complex Strategies:
  • Professional whales may run multiple option strategies on the same stock, not always seeking to “pick winners” but to juggle risk and squeeze out income (05:33–05:48).
  • “As traders, we are not… thinking about what this person is doing. We're really thinking about just numbers... this is completely algorithmic.” — Mike Koh (05:48)

4. Spotting Unusual Whale Behavior

• Tools for Detection:
  • Matt Sankom, CEO of Unusual Whales, explains how spikes in option activity can signal unusual interest or possible information advantages (06:31).
  • “Imagine a restaurant in a quiet neighborhood that all of a sudden has a line out the door. Seems like something might have changed, right?” — Matt Sankom (06:38)
• Not All Whales Do Research:
  • Sometimes, as with a $74 million bet on Taiwan Semiconductor, the “whale” appears to be a non-institutional trader who simply picked a direction and lost—wrongly assuming size equates to insight or research (07:34–07:48).
  • “It mostly appears that this guy picked a direction very confidently and was wrong.” — Matt Sankom (07:41)

5. Options and Insider Information

• Highly-Timed Bets:
  • Some winning whale trades are timed eerily close to major political announcements, raising suspicions of insider information (08:08).
  • Example: “Right before the announcement about that tariff pause, somebody placed a large bet the S&P 500 would go up in value. And they were right… Those lucky ducks made close to $200 million.” — Ricky Mulvey (08:31–08:40)
  • “So it's almost as if maybe someone knew he was about to pause this thing. Now we don't know for sure, and we can't know for sure.” — Matt Sankom (08:44)
• Political Conflicts:
  • US lawmakers can legally trade stocks and options, raising concerns about conflicts of interest, especially when trades overlap with their legislative oversight (09:10–09:20).

6. Calls for Reform

• Legislative Proposals:
  • The "Stop Insider Trading Act" and the "Restore Trust in Congress Act" seek to restrict Congress members and their families from trading stocks and options, but neither is law yet (09:29–09:48).

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Memorable Quotes and Moments

• "I decided that I must find one, any whale for this story... no matter the physical or mental cost, no matter how many seas I had to cross." — Ricky Mulvey (01:19)
• “Well, call me Ishmael. Today on the show, we are going inside the world of option whales.” — Waylon Wong (01:39)
• “We trade 8 million contracts a week on about 100 stocks.” — Mike Koh (05:33)
• “Sometimes the timing raises questions, especially in the world of politics.” — Waylon Wong (09:10)
• “They're more likely to invest and trade in stocks where they sit on a committee that regulates those industries.” — Matt Sankom (09:20)

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Notable Segment Timestamps

• 00:31: Ricky Mulvey explains what options and option whales are.
• 03:40: Data on the boom in options trading since 2019.
• 04:21–04:45: Institutional use of options as insurance.
• 05:33–05:48: Mike Koh on complex, algorithm-driven trading by whales.
• 06:38: Metaphor for detecting suspicious trading activity.
• 07:12–07:48: Breakdown of the $74 million failed bet.
• 08:08–08:44: Links between political events and profitable whale options bets.
• 09:10–09:48: Discussion about insider trading and proposed legal reforms.

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Tone & Style

• The episode uses playful, literary references (Ahab, Ishmael) while injecting a sense of investigative curiosity and skepticism.
• The hosts blend clear explanations of financial concepts with humor and memorable analogies to keep complex material accessible and engaging.

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Conclusion

This episode peels back the curtain on the “whales” of options trading, revealing that even the biggest, boldest bets often don’t pay off—unless timed with privileged information. Beneath the splashy headlines, most whale trades are driven by institutional risk management or impersonal algorithms, but the potential for abuse and insider advantage remains, especially among the politically connected. The episode leaves listeners with a sense of the market’s dynamism, intrigue, and the need for greater oversight.

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Transcript

[A]

Npr. This is the indicator from Planet Money. I'm Waylon Wong. And today it is the return of Ricky Mulvey. Ricky is the co host of the finance and investing podcast. This Time is Different. Hi, Ricky.

[B]

Hey, Waylon. Good to see you.

[A]

Good to see you, too. And you are here because you have been doing some whale watching.

[B]

Not belugas or narwhals. I have become obsessed with option whales. These are traders, sometimes institutions, sometimes wealthy individuals who place large bets using something called options. They're not necessarily buying a stock itself. They're buying the right to buy an asset, like a stock at a certain price with a set expiration date. It's essentially a bet on what the price will be within that time frame.

[A]

And, and sometimes those bets are worth tens of millions of dollars. A recent example, one whale placed a $74 million bet on one company's stock price.

[B]

I wanted to know, did this trader know something? Were they making easy money? But these questions grew into something larger. I became obsessed with options whales. I decided that I must find one, any whale for this story to understand what they're doing. I would find an options whale, no matter the physical or mental cost, no matter the toll it took on, no matter how many seas I had to cross.

[A]

Okay, Ahab, so how did it turn out?

[B]

The journey was significantly shorter than I anticipated, and I quickly found one.

[A]

Well, call me Ishmael. Today on the show, we are going inside the world of option whales. Who they are, what they're doing, and why these massive bets don't always pay off.

[B]

That's after the break.

[C]

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[A]

You may have Seen an option before outside the world of investing. If you're browsing for airline tickets, you can pay the airline a fee to freeze the current ticket price, which you can then buy at a later date.

[B]

So if in the meantime the airline ticket rises in price, you're going to be happy that you locked in a cheaper fare if the price goes down, yeah, your ticket price has gone down, but you've lost that fee, right?

[A]

In the world of markets, this is functionally called a call option. Traders can pay for the right to buy an investment at a certain price within a certain time period. And interest in options trading has exploded. Traders are paying each other for the rights to buy and sell investments at agreed upon price points.

[B]

In 2019, traders exchanged about 5 billion contracts for U.S. listed options. Last year, they exchanged more than 15 billion.

[A]

So I would say it is a phenomenon that's kind of a post Covid phenomenon.

[B]

That's Amy Wu Silverman with the Royal bank of Canada.

[A]

Amy says it's not only that more whales are playing in the same market. The market is also changing from times past. We didn't have weekly options, we didn't have daily options, and so you kind of were forced to kind of play in the one to three month space.

[B]

Now traders can make these bets in shorter windows of time, speculating for as little as one day out, instead of only planning for months out.

[A]

Now, for big institutions, it's not just about speculation and growing their income. They will often use options to protect their investments.

[B]

Imagine that you're investing for thousands of people's retirement funds. If your stocks go to zero, you can hurt people's livelihoods.

[A]

So institutions will buy options to guarantee a price at which they can sell those investments. They aren't trying to make money, but rather prevent a catastrophic loss. You essentially want insurance the same way you own insurance on your house because of a flood or fire. They think about their portfolios that way because for a lot of institutions, that money that they're protecting is one day going to be for someone's 401k or someone's pension plan, and they have to make sure that it's there.

[B]

Sometimes whales trade options as a part of a more complex trade.

[D]

It's always very interesting to hear other people talking about your trading activity and speculating about what it means, rather than just asking.

[A]

This is our whale, Mike Koh, founder of Open Interest Pro and a strategist for the Yieldmax family of ETFs at Tidal Financial Group. These are investment funds with options, and

[B]

Mike's firm Trades a lot of options.

[D]

You know, we trade 8 million contracts a week on about 100 stocks.

[B]

Mike has multiple funds and multiple option strategies, sometimes on the same stocks. He's trying to juggle different bets to squeeze out some income and not lose his shirt.

[D]

As traders, we are not, you know, we're not sort of thinking about what this person is doing. We're really thinking about just numbers, frankly. So. And many times this is completely algorithmic.

[A]

So to recap, there are more whale options trades because the whole market has been growing, and these traders have a larger menu to select from.

[B]

A lot of the activity is pedestrian. Some whales are using options for insurance or buying them because an algorithm told them to. These are the regular whales. But this isn't the only reason whales trade options. Some whales are a bit more suspicious.

[D]

I'm Matt Sankom, and I am the CEO of Unusual Whales.

[A]

Unusual Whales is an investment service that tracks options trading.

[B]

Matt looks for spikes in activity to see if the whales are changing their behavior, particularly on investments they don't often trade.

[D]

Imagine a restaurant in a quiet neighborhood that all of a sudden has a line out the door. Seems like something might have changed, right?

[A]

Matt believes that these lines are worth paying attention to these spikes in activity.

[B]

Matt's team helped us look into some speculative options activity. Remember the $74 million bet at the beginning of the show? This was on the price of Taiwan Semiconductor stock, the company that manufactures Nvidia's chips.

[A]

This trader was hoping the price of the stock would go up. And when Matt's team looked at the trade, he noticed a few odd things.

[D]

This was a large entity, but interestingly, didn't seem to have a very professional connection to their broker.

[B]

Translation, this was a large bet, but it didn't appear to come from a major Wall street firm.

[A]

You might expect that this options whale coming out of the deep blue would have a reason to be so confident that the stock's price would move up.

[D]

Oftentimes, you give the whales the benefit of the doubt, and you assume that their size equals some level of conviction or research. However, it mostly appears that this guy picked a direction very confidently and was wrong.

[A]

That's right. That $74 million bet we told you about at the top was a dud. The stock did not move up the way they thought it would, and the whale lost money on this big trade. Confidence does not always pay off.

[B]

But some whales are confident for a good reason, especially if they might have information that the rest of us don't.

[A]

Unusual Whales has noticed some odd activity around political announcements. Let's go back to the days of press conferences about tariffs. If you recall, in April of last year, markets were not happy when President Trump first announced sweeping tariffs.

[B]

But then a few days later, President Trump posted on Truth Social that he was pausing tariffs for 90 days, news that the markets cheered.

[A]

Right before the announcement about that tariff pause, somebody placed a large bet the S&P 500 would go up in value. And they were right.

[B]

Those lucky ducks made close to $200 million.

[D]

This position was open before Trump posted Bye on Truth Social. So it's almost as if maybe someone knew he was about to pause this thing. Now we don't know for sure, and we can't know for sure.

[B]

The timing was striking. This bet did not have much room for error.

[D]

It was only that day they had a chance to make a profit on this trade.

[B]

Yep, sometimes the timing raises questions, especially

[A]

in the world of politics. Republican and Democratic Congress members can trade stocks and options while they are serving in government. Matt says that's a conflict of interest.

[D]

They're more likely to invest and trade in stocks where they sit on a committee that regulates those industries.

[B]

These types of suspicions prompted legislation. Multiple acts are working their way through Congress. The Stop Insider Trading act would prohibit members of Congress and their immediate family members from purchasing publicly traded stocks. And the Restore Trust in Congress act would ban members from owning stocks and trading altogether.

[A]

Neither of these acts have been signed into law.

[B]

You know, Waylon, I think I want to run for Congress in the meantime. Oh yeah?

[A]

What's your position gonna be?

[B]

Probably a tech stock.

[A]

Okay, great. Drinks on you. This episode was produced by Julia Ricci with engineering by Sina Lofredo. It was fact checked by Cory Bridges. Cake and Cannon is the show's editor and the indicator is a production of npr. Planet Money wrote a book and we are going on tour. If you you live in New York, Boston, Washington, D.C. pittsburgh, Louisiana, San Francisco, Seattle, Portland or Chicago. We'll have special guests stories and take your questions. I'll be at the Chicago one. Tickets are at planetmoneybook.com, you can find a link in the show notes. This message comes from Capella University. That spark you feel? That's your drive. For more. Capella University's flexpath learning format lets you earn your degree at your pace without putting life on pause. Learn [e-mail].

[C]

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