For example, is there no way that the call options could be purchased on the other side by a friendly party that is a participant in the game?
Does the market absolutely prevent this kind of thing from happening? If not, could this a be way that senators (from both parties of course!) could conceal their insider trading?
This is very hard to do (read effectively impossible) as an individual person and not an institution. Trades, especially options, go through a brokerage/market maker.
As an individual, there's no way to tell your brokerage to sell "these contracts" to "this person". Which means you would have create "the sale of call option contract" as physical paper? I'm doubtful that's even possible. After you have to manually sell it. It still needs to be declared as a security transfer/sale[0]. THEN you would need to back that contract with the stocks that likely still sit inside a brokerage. The "other participant" would have to then exercise that contract which would "pull" the stock from your account to the "participant's" account.... Would this be done in a brokerage? all outside? Seems impossible as a regular person.
For institutions there is such thing as block trades that happen outside of market, but they're specifically licensed/authorized to do this.
[0] https://www.quora.com/How-can-I-sell-my-shares-to-a-particul...
The congress person wasn't holding the options contract. He sold call options to someone else. Which actually means he "owes" stock if the contract is exercised.
The congressman is betting the contract will expire worthless and make money on the premiums when he sold the call options.
Maybe I missed something?
Now, you probably could write options off the market if you really wanted to, I suppose.
>is there no way that the call options could be purchased on the other side by a friendly party that is a participant in the game?
Not for retail traders. I sell covered calls a lot and I never know who buys them.
It would be suspicious but his "alibi" is that it was part of someone exercising call options that he sold.
Assuming this is true, he actually has no control when the exercise happened, thus no control of the timing of the sale of the stock itself.
This would need to be verified via the brokerage probably through a subpoena, so it's not really a realistic investigation.
Someone else said that he sold the option the same day he bought the stock. That would clear him from any suspecion. However, that's second hand based on someone saying it was in the article and I misread it (quite possible.)
What I was claiming is that the timing makes me think he might sold the option after getting inside information, specifically so he could say "I had to sell the stock" which is a true an irrelevant fact if you sold the obligation based on that information.
Now, like I said, if he sold the option the same day he bought the stock, then he is clearly innocent. And similarly, if he sold a 1-week ITM option after getting briefed, I think he is clearly guilty (morally, if not legally).