IanBezek Posted September 19, 2018 Share Posted September 19, 2018 Shorting these sorts of manias is one of the fastest ways to blow up an account. If you do want to short calls, please use spreads, otherwise this sort of move can lead to ruin. Sound advice here! Ian I remember you from several years ago when you authored an article on Yongye International - I think you were pretty young at the time. I had investigated that company, including on the ground in China. It was shady. Went private at $7.10. I think they bought a zero, but we'll probably never know. As for my age, I'm 29 now, so I was quite young back in 2011. Link to comment Share on other sites More sharing options...
siddharth18 Posted September 19, 2018 Share Posted September 19, 2018 Anyone looking at bear put spreads on $TLRY? Link to comment Share on other sites More sharing options...
IanBezek Posted September 19, 2018 Share Posted September 19, 2018 For October near the money, say 230/240, it costs about $8 to make $2 if you get a fill at the midpoint. Not much reward. Link to comment Share on other sites More sharing options...
Gregmal Posted September 19, 2018 Author Share Posted September 19, 2018 Yea I think it's really tough to work something with the puts in terms of a purchase. They're just way too expensive. IMO the money is in selling the options, whether it be puts, or calls, or both, especially if you can trade around in the stock and also collect some of the rebate. I believe there are now 2020 options available. Was told the borrow today was near 80% a month. Just incredible. Makes the Volkswagen squeeze look like child's play. This has a $25B valuation on 23M in sales. Link to comment Share on other sites More sharing options...
hillfronter83 Posted September 21, 2018 Share Posted September 21, 2018 Buy the stock to lend, sell the call. Let's use the Mar'19 30-strike Call as it has more volume. You're exposed below: Stock Price - Call Premium - Interest received 120 - 89 - 6 months of borrow In the worst case, you'll need to make $30 in borrow between now and March 19 to break even if the stock goes to zero. Anything else is gravy. I suspect the call buyer would exercise the call immediately, so you wouldn't get the chance to lend your stock. This is indeed what happened. Looks like my shares were called. Link to comment Share on other sites More sharing options...
Jurgis Posted September 21, 2018 Share Posted September 21, 2018 Buy the stock to lend, sell the call. Let's use the Mar'19 30-strike Call as it has more volume. You're exposed below: Stock Price - Call Premium - Interest received 120 - 89 - 6 months of borrow In the worst case, you'll need to make $30 in borrow between now and March 19 to break even if the stock goes to zero. Anything else is gravy. I suspect the call buyer would exercise the call immediately, so you wouldn't get the chance to lend your stock. This is indeed what happened. Looks like my shares were called. For general education purpose can someone explain to me: why would someone buy a call at premium and then immediately exercise it? Why didn't they buy stock which would have yielded the same result without paying call premium? Link to comment Share on other sites More sharing options...
LC Posted September 21, 2018 Share Posted September 21, 2018 Buy the stock to lend, sell the call. Let's use the Mar'19 30-strike Call as it has more volume. You're exposed below: Stock Price - Call Premium - Interest received 120 - 89 - 6 months of borrow In the worst case, you'll need to make $30 in borrow between now and March 19 to break even if the stock goes to zero. Anything else is gravy. I suspect the call buyer would exercise the call immediately, so you wouldn't get the chance to lend your stock. This is indeed what happened. Looks like my shares were called. For general education purpose can someone explain to me: why would someone buy a call at premium and then immediately exercise it? Why didn't they buy stock which would have yielded the same result without paying call premium? This is kind of what I didn't understand. What's the point? Link to comment Share on other sites More sharing options...
RichardGibbons Posted September 21, 2018 Share Posted September 21, 2018 why would someone buy a call at premium and then immediately exercise it? Why didn't they buy stock which would have yielded the same result without paying call premium? The call that he was talking about is so deep in the money that it wasn't selling at a premium. Link to comment Share on other sites More sharing options...
Jurgis Posted September 21, 2018 Share Posted September 21, 2018 why would someone buy a call at premium and then immediately exercise it? Why didn't they buy stock which would have yielded the same result without paying call premium? The call that he was talking about is so deep in the money that it wasn't selling at a premium. Ah. Thanks. Link to comment Share on other sites More sharing options...
cogitator8 Posted October 2, 2018 Share Posted October 2, 2018 Anyone looked at IGC, it is a US based pot pharma, selling CBD infused soft drinks, up 300% in last one week, it sure is a bubble. How one can take advantage of this mania using options ? Link to comment Share on other sites More sharing options...
Gregmal Posted October 2, 2018 Author Share Posted October 2, 2018 Anyone looked at IGC, it is a US based pot pharma, selling CBD infused soft drinks, up 300% in last one week, it sure is a bubble. How one can take advantage of this mania using options ? Looks like a small float with no options(at a very brief glance). That said, the ATM offering is likely to put somewhat of a lid on this. Doing a 15M offering with a 30M+ valuation is huge. Additionally, ATM means these will be dumped directly into the market, rather than placed. Link to comment Share on other sites More sharing options...
Pelagic Posted October 3, 2018 Share Posted October 3, 2018 why would someone buy a call at premium and then immediately exercise it? Why didn't they buy stock which would have yielded the same result without paying call premium? The call that he was talking about is so deep in the money that it wasn't selling at a premium. Ah. Thanks. I'm still lost on this one. Even if there is no premium and the call's price is exactly equal to the price of the stock minus the call's strike price why bother exercising the call. Commission fees alone would make this a worse strategy than just buying stock, correct? Even still, it seems most extremely deep ITM calls will usually have a slight premium to them. Link to comment Share on other sites More sharing options...
Jurgis Posted October 3, 2018 Share Posted October 3, 2018 why would someone buy a call at premium and then immediately exercise it? Why didn't they buy stock which would have yielded the same result without paying call premium? The call that he was talking about is so deep in the money that it wasn't selling at a premium. Ah. Thanks. I'm still lost on this one. Even if there is no premium and the call's price is exactly equal to the price of the stock minus the call's strike price why bother exercising the call. Commission fees alone would make this a worse strategy than just buying stock, correct? Even still, it seems most extremely deep ITM calls will usually have a slight premium to them. I think the thought process here is: yes, the deep ITM call has slight premium, yes, you will have to outlay more cash for stock, yes, you will lose on commissions. BUT. You can now lend the stock at 30% interest, so you are better off converting to stock than holding ITM call. You may ask then: why did that person buy the call in the first place instead of buying stock? Well, it likely was not deep ITM when they bought it, so the above equation was not as attractive. Link to comment Share on other sites More sharing options...
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