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Becton, Dickinson and Company Message Board

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  • JM_Options JM_Options Nov 5, 1998 5:59 PM Flag

    BDX's fluctuating price

    My information about there being one large seller
    comes from the fact that, on most of the large size
    trades, the same brokerage house was on the sell side.
    That could be one person, or 100 people from the same
    brokerage house. It really doesn't matter, since their
    money is being bet on the downside move in the
    stock.

    As far as the "strangle" buyer, yes, if he
    knew the stock was going to go up, he could simply buy
    fewer calls to get the same return. However, if he knew
    there was going to be a surprise in the earnings
    report, but didn't know which way, positive or negative,
    the strangle gives him the opportunity to profit from
    either an up or a down move in the stock, as long as
    that move is dramatic. There are many types of people
    who do these types of trades, some are gamblers, some
    think they know the direction of the stock, and, yes,
    believe it or not, some are cheaters in that they have
    some inside person giving them information about the
    company, before that information is released to the
    general public. Did you ever notice that in the few days
    or weeks before a merger announcement, how the
    volume of the stock of the company that is going to be
    aquired suddenly jumps for no apparent reason? Did you
    also ever notice how the options of that company also
    show dramatic increases in volume for no apparent
    reason. My point is that, in fact, there is a reason for
    this unusual activity, these people have non-public
    information. Since it is something that is very difficult to
    prove, most of the time these cheaters get away with it,
    and make large profits because of it. It's like
    whisper down the lane, in that one guy gets the
    information, buys the stock or options, and then tells a few
    close friends the information. They then do the same
    thing, and the geometric progression continues and the
    glaring evidence of this type of activity is the unusual
    volume in both the stock and options. If you look in
    Investor's Business Daily, they report unusual activity in a
    stock by printing it in boldface type.

    The guy
    who did the strangle might have been the same guy who
    sold the stock down, but if that were true, wouldn't
    you expect him to buy the puts while the stock is
    high, (and before he starts selling the stock down),
    and then buy the calls as he finishes selling his
    stock (while the stock price is low). In this way, he
    would put the strangle on for a much cheaper price, and
    since money is the driving force behind this game we
    call a stock market, that is what I would expect him
    to do, regardless of how he eventually decides to
    get out of the position.

    Hope I didn't bore
    you with too many details. Good
    luck.

    JM

    By the way, the earnings have come out, and were
    reported as $.34 per share but there is a $.05 charge in
    there. We'll have to wait and see what happens to the
    stock tomorrow. I wonder if the put players and stock
    sellers only heard the part about the earnings being
    $.34, which would be much less than the $.40 that was
    projected? If that is the case, they will get their just
    reward!

 
BDX
139.34-0.56(-0.40%)Dec 26 4:08 PMEST

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