ERICOPOLY Posted August 9, 2011 Share Posted August 9, 2011 Write 1x the at-the-money SHLD 2013 $60 put for roughly $20, buy 2x the $60 2013 call for nearly $10. Leveraged 2x upside with 1x downside. Why would anyone buy the shares with this deal going on? Link to comment Share on other sites More sharing options...
twacowfca Posted August 9, 2011 Share Posted August 9, 2011 Write 1x the at-the-money SHLD 2013 $60 put for roughly $20, buy 2x the $60 2013 call for nearly $10. Leveraged 2x upside with 1x downside. Why would anyone buy the shares with this deal going on? Are the shares on "special"? In other words, is the cost to borrow steep? This is often the reason for the asymmetry you describe. If so, an optional deal might be to buy the shares and rent them out to the short sellers. Link to comment Share on other sites More sharing options...
mevsemt Posted August 9, 2011 Share Posted August 9, 2011 Quick and dirty analysis of SHLD's ownership, buybacks, and short interest: http://mevsemt.blogspot.com/2011/03/short-analysis.html Link to comment Share on other sites More sharing options...
JSArbitrage Posted August 9, 2011 Share Posted August 9, 2011 Interesting relationship. You can actually sell a $40 put for $10 and use that $10 to buy a $60 call. Not my thing but certainly interesting. Link to comment Share on other sites More sharing options...
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