Lot written about those 16,000 outstanding contracts for Jan 2.50. Just for perspective I will tell you about mine. I am a long, and intend to hold this to $3/share, my estimate of the book value after the mark to market losses are unwound next year.
I wrote 100 of those 16,000 contracts in December, and in hindsight should have written more. In with a cost basis about $1.20, I decided it was worth $0.15 to give someone the right to buy me out at $2.50, double the price a month later. Maybe I lose some upside, but my goal was about using this as an opportunity to just further reduce my basis.
I do not plan to immediately dump those 10,000 shares the moment they are "unlocked". I plan to sell them when they get to what I consider a fair value. If I were really nervous, I wouldn't be too cheap to buy the calls back now for a nickel so I could unwind immediately. No sensible investor would just sit and wait to save a nickel and then dump.
Interesting to note that at the time I wrote those calls in mid december open interest was about 8,500 contracts. The doubling of open interest in the next three weeks represents some big optimism at the time.
Not into options just started learning. My question to you once the option ends on the 18th do have to buy those shares at the closing price of the 18th? Or how does that all work if you not able to sell your call on or before the 18th. thanks
I think the most positive thing I've found about LUM is the people on this message board. On the other web boards of stocks I own, none of the information was as thoroughly developed or researched as that which I've seen here. One individual has mapped out the investments of the owners of Gramercy (which I wouldn't mind the updated version being posted again), others have done their own thorough analysis on book value, earnings value estimates, and other approaches. I've perhaps learned more on this board than I have at work. I am very long on LUM (over 50% of my holdings are in LUM) and whatever happens, I appreciate all you guys have taught.