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Silver Wheaton Corp. Message Board

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  • yourdeadmeat69 yourdeadmeat69 Nov 24, 2012 10:34 AM Flag

    Option movement last week didn't make sense

    Weekly's or monthly's a week prior to expiration that have retained an excess of value drop exponentially in reverse parabolic mode as they approach expiration--an 80 cent call 8 days from expiration at the money would drop 10 cents a day if the underlying stock never changed a penny. An 80 cent call option pummeled for three days two dollars in the underlying stock would halve TWICE to about 20 cents, rising the next couple days prior to expiration only enough to offest the ten cent decline--two more days, a rise in the stock to just below strike would yield just the result you talked to.

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    • I understand your explanation and it would make sense if other options I have traded acted in a similar way as this. But they haven't. Even when I sold SLW Oct. 26 calls on the last trading day, the premium did not change much, even though the time value had dropped to almost nothing. Other similar options I sold a few days before expiration day without the stock price dropping much and the premium did not move that much. If you look at last week's chart for SLW, you will see that it didn't drop THAT much, and on Friday (the expiration day) the stock price returned almost to where it was trading five days earlier on Monday. I wonder if because Thursday was a holiday and Friday was a half day of trading, along with the fact that this option expired on Friday (not on Saturday as many options do), affected the premium valuation. Of course, I'd love to believe that there was manipulation and I was wronged. As to your reference to options "that have retained an excess of value," that "excess" was lost on Monday and the option premium barely moved with the underlying stock price from late Tuesday to the final day of trading for the week.

      • 3 Replies to contraindicator
      • Determining option valuation with low volume issues options, is like trying to identify sea life at the bottom of the Mariana trench by checking the froth at the top of a wave off the coast of LA. I shall always be an option seller under those conditions.

      • My initial reply post "failed to post" per Yahoo. It suggested I check out "tips for posting." After doing so, I removed some of the same numbers I supplied in my first post. After the change, the post was accepted.
        So, the obvious question is, if Yahoo can recognize such a post as "unacceptable," can it not also recognize the pattern of "spam" posts and their subsequent spam replies that the rest of us can easily recognize? Why are those viewed by Yahoo as "acceptable?" Those posts should be stopped with a notice of "failed to post" as I experienced. A live person at Yahoo might even send a private message asking us "how DO you recognize those spam messages so easily? What program do you use? What words do you recognize that give away so easily that those posted messages are spam?" If I got an email from them, I would tell them, as I have several times in response to their solicitation for "suggestions on improving the message board" which appears on the message board as a link to click on..

      • My previous post referring to the call options I had sold were the calls I had bought earlier, not options I had shorted. (I wasn't sure if some readers might have misinterpreted my reference to selling the options.)

12.69-0.27(-2.13%)Nov 25 4:02 PMEST