Congressman Engages in Options Trading: A Closer Look
Recent Options Trading Activity by Members of Congress
The trading practices of members of Congress have become a topic of discussion and scrutiny in recent times. With the ability to buy and sell stocks and options freely, some members have been making notable moves just before options expiration dates, raising questions about their trading motivations.
Congressman’s Disclosure of Options Transactions
Among those members is Rep. Robert Bresnahan, who recently made several significant options purchases. He has disclosed multiple options trades involving prominent exchange-traded funds (ETFs), which could be indicative of market activity resembling that of day traders.
Options Purchased by Rep. Bresnahan
Bresnahan’s recent transactions included the following options on major market indexes:
- Invesco QQQ Trust (NASDAQ: QQQ): Options with a strike price of $450, set to expire on September 19, 2025. The option was valued between $1,000 and $15,000 upon purchase.
- SPDR S&P 500 ETF Trust (NYSE: SPY): Options at a strike price of $470, set to expire on September 19, 2025. This purchase, made on September 16, was valued at $15,000 to $50,000.
- iShares Russell 2000 ETF (NYSE: IWM): Options with a strike price of $175, expiring on September 19, 2025. This trade was valued between $1,000 and $515,000.
- Another set of options for IWM with a strike price of $175, also set to expire on September 19, with a valuation of $1,000 to $15,000.
- Additionally, options for QQQ were purchased with the same strike price and expiration date.
Short-Term Trades Reflecting Day Trading Style
Each of the trades Bresnahan executed came with expiration dates just a few days away. This short-term betting strategy is akin to the tactics of day traders or swing traders, a practice that is not commonly associated with members of Congress.
Statement Regarding Trading Decisions
Interestingly, Bresnahan clarified that he is not personally making these trading decisions. In his disclosure, he emphasized that all investment choices related to his portfolio are entrusted to professional financial advisors. He stated that he is not informed of specific trades before they occur, implying that the decisions are entirely in the hands of those advisors.
This approach delineates a clear boundary where the Congressman’s personal involvement is minimized regarding his financial decisions.
Analyzing Performance of Options Investments
It remains unclear how many contracts were purchased for each ETF or at what price the trades were executed. However, close examination of ETF closing prices can offer insights into the trades’ performance.
Here are the ETF closing prices on the days associated with Rep. Bresnahan’s purchasing decisions:
- QQQ closed at $591.18 on the day of purchase and $599.35 on the expiration date.
- SPY's price on the purchase date was $660.00, rising to $663.70 by expiration.
- IWM jumped from $239.35 at purchase to $242.98 by expiration.
Potential Returns from Options Trading
It is likely that each of these options trades finished in the money, presenting opportunities for higher selling prices or conversion to common shares. The successful trades potentially boosted the value of Bresnahan’s portfolio, showcasing how strategic choices in options trading can benefit investors significantly.
Frequently Asked Questions
What prompted the scrutiny of Congress members’ trading activities?
Public interest and concern over potential conflicts of interest, especially regarding significant financial transactions by lawmakers, have led to increased scrutiny.
What specific options did Rep. Bresnahan purchase?
Bresnahan purchased options in the QQQ, SPY, and IWM ETFs, all with short-term expiration dates.
How does Bresnahan control his investments?
The Congressman has stated that he relies on financial advisors for decision-making, ensuring a level of separation from direct trading activities.
What indicates that these trades were day trading?
The short-term expiry dates and rapid turnover suggest that the trades follow a day trading style, which involves quick buying and selling.
How did the options perform after purchase?
The closing prices indicated strong performance, as the options likely ended up in the money, enabling profitable sales or exercises.
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