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Huntsman Corporation Message Board

  • deft2daft deft2daft Feb 1, 2013 12:59 PM Flag

    AGAIN.... PUT option strategy

    Naomi:

    I think your general perception that this is a manufactured trade designed to get more yield out of a HUN investment is true. I know that's not what you stated and you are laying off much of the action to computer models and etc. but elements of that would go into this particular trade.

    Nobody (here at least - esp. sl1ck, it seems) was willing to do ANY amount of research on what SELLING puts actually signifies - why a LONG would do it, generating vig, etc. - and to do so would basically provide the necessary explanation since I guess nobody seems to believe what I've been posting.

    I'd say "the fact is that..." but will instead say "the evidence presented clearly suggests that" a large HUN holder who wants to stay long and - by default - IS BULLISH decided to write some medium short-term (5 month) put options and sell them to somebody in order to generate about $400,000.00 of premium. Is it a lot relative to a 2MM share HUN holding (or roughly $36MM holding)? No, but it's in excess of 1.00% and is significant.

    The buyer could very well have been an associated long. But - as any diligent researcher on the subject would find - PUT options in particular are a much sought after commodity by banks/hedgies as needed window-dressing for their portfolios.

    Last - and relevantly - Berkshire Hathaway is famous/notorious for selling puts against their holdings in order to do exactly what I have pointed out - generate more investment return. 1.00+% on a shortterm deal is not insignificant for parked stock.

    If anybody wants to actually learn more about what actually happened here, I'd suggest to simply google something like "selling put options to generate investment return Berkshire Hathaway" or "strong demand for put options seller" etc.

    Later... Please check my next unrelated post question. Would love some feedback ideas on this...

    Sentiment: Hold

 
HUN
14.45-1.80(-11.08%)Jun 24 4:02 PMEDT