Just buying calls, so far, on PB.
bear's strategy (which is actually mildly bullish, so
maybe (s)he misnames himself/herself) is not a bad one.
I'd tend toward shorter-term puts, though (1-2 months
out). But watch those commission costs...they tend to
add up fast.
I WAS writing some puts on some
beaten up techs, but they've rebounded quite a bit, so
the window of opportunity may have passed. Indeed, it
may be passing on PB, too, given the activity I'm
seeing today. But with the volatility we've been seeing,
there's a good chance we'll see another downturn in the
There may be some recognition
that there was a bit of an over-reaction to some of
the bad international news, but we may now be seeing
an over-reaction to hopes for a U.S. (or even a
concerted global) interest rate cut. We're not out of the
woods, yet, and more volatility is to be expected, given
continued international (and now domestic) turmoil. But
BTW, I assume you're comfortable
with puts, but, if not, be careful with them, it's
deceptively easy to get carried away and get caught in a
margin situation. So make sure you'd be willing to
accept margin in a worst-case scenario (say another 50%
drop) or better, make sure you've got enough cash
available to cover the assignment. I prefer to have the
cash available and think of the puts as a GTC order,
for which someone is paying me a premium. For me,
it's psychologically important to sell puts only on
positions I'd be willing to hold long at that entry price.
But then you get to the logical question, if you're
truly bullish, why limit your upside to a put premium,
while accepting all the downside risk?
Since you sound semi-serious, some semi-serious
If you're truly interested in that position, and are
comfortable with the downside risk over that time period,
just sell the Apr99 12.5 puts. You'll tie up less cash
and/or avoid interest charges and extra commission
If you're buying the stock and selling the covered
call at the same time, you've created a synthetic put.
Unless there is a dislocation in pricing (which
arbitragers will usually fix well before you or I spot it),
you usually come out better just selling the put,
itself. You avoid the second commission. If you're
ultimately bullish, the put should be more likely to avoid
the assignment fees, as well.
importantly, the put ties up less of your cash and/or avoids
an interest charge. Always do the math, but the
opportunity cost or interest charges usually outweigh the
higher premium the calls generate.
that's enough to justify the put route, but if you
explore the grey area the put looks even more
advantageous - since the cash requirements are lower, the
percentage return is actually a bit higher. Granted that's a
bit misleading, since you're effectively committing
to make use of margin in a worst-case scenario, and
you're approaching the slippery slope. But the
conservative approach (keeping all the funds you'd need to
purchase the stock in cash) still allows you to earn a
nominal return on some of that cash for the option
FWIW, the options prices are now more accurately
representing potential volatility (including upside
volatility) for the stock, IMHO. Previously, the prices
appeared artificially cheap ("fear", as you suggested).
In general, since the stock has loudly proclaimed a
return to significant volatility and can be expected to
continue this way for the mid-term, options will be
pricier. The long period of trading in the 30-40 range,
with relatively low options premiums may appear to be
an anomoly when one examines the chart over the very
Another gratuitous comment, if
you're seriously considering a synthetic put: I prefer
to maximize the per-month time value of the options
I'm selling and to minimize the per-month time value
of the options I'm buying, so I buy longer-term
options (6 months+) and sell shorter-term options (1-2
months). But that's largely a matter of style, and
risk/reward preferences - obviously one has to determine how
desirable it appears, and how comfortable one is, being
locked in at a given level for the different periods of
Mind you, I'm not recommending such a play, nor am I
doing it myself.
Congratulations, Gwy. It appears that fear is
temporarily commanding a very high premium for PB options.
I wish I had a ton of cash just waiting for a
short-term trade. I'd be buying PB and selling the apr 12
1/2 calls for 5 1/2 (!) each. Net cost would be
10.1875/share, so if you got an eventual exercise at 12 1/2,
it's a quick 22.6% profit (and no loss unless the
stock stays below 10 3/16). But if you're in it for the
"long-term" (in spite of the fact that, including yield, the
stock has returned about 1% annually since late 1993),
I guess you wouldn't mind holding the loss.
<"how are those call options doing,
They're holding up pretty well. Thanks for your concern.
Here's a link you can use if you want to track
Otherwise, check back with me in April.
By the way,
are you trying to add any value, here? You're doing
an awful lot of posting for someone who claims to
have no position or interest in the stock.
you're short, as your nic implies, just say so. So far,
you've provided no reason to give your posts any kind of
credibility. The most interesting thing you've posted is your
Otherwise, you appear to be visiting
this board with the sole purpose of attempting to goad
people and/or incite panic reactions. Sad if that's the
case. And not worthy of further response.
remain happy to engage in any serious discussion of the
stock, if you're long, short, or just looking.
I have no position in this stock; you, on the
other hand, have a highly leveraged one. As I said,
I've been seriously considering PB since it was at 28.
I am also not dumb enough to believe that anything
posted here actually moves the liquid ADRs of a midcap
foreign company one way or the other. (When everyone on
the message board of a stock that's been falling
through the floor expresses bullishness, however, it's
not a good sign; a good sign would be if people
started posting things like "I bailed out of this &%4#!^
stock because it is going straight to 5; good luck to
those of you who are foolish enough to stay
That being said, while I have suggested an alternative
investment in the beverage sector (one whose EPS prospects
are brightening, not worsening), all you do on this
board is cheerlead. As I said, look at how low the
trailing P/E dipped in 1995; all the way to seven, I
believe. There's nothing wrong with having a little cash
come late October. Furthermore, anyone asking about
options strategies on a Yahoo! board doesn't need to be
trading options; you aren't doing anyone a favor by
advocating high-risk forms of investing in an unperforming
You want to talk fundamentals? Fine, lets
talk. The estimate downgrades for 3q and 4q this year
were based mainly on weakness _currently_ being
experienced in some of the company's key markets; not on some
sort of unjustified fear of the future. If the company
isn't executing on plan when macroeconomic conditions
are favorable, what will happen when they turn
poorer? Nobody knows, but everybody knows it probably
won't be good. This company may well earn $1.00 in
FY99, and the stock could fall to 11-13 as soon as next
month; if you are in in for the "long-term", that's one
thing, but "long-term" investors aren't holding options
that expire in six months.