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Radware Ltd. (RDWR) Message Board

  • jeffereyf2003 jeffereyf2003 Aug 25, 2011 5:21 PM Flag

    $36 Dec put...

    Normally the option seller is the winner...someone sold 637 puts at $11.40 this morning...equivalent to the seller saying...i am willing to buy over 63,700 shares of RDWR at this price...it also says that if RDWR goes to my strike of $36 by opex in Dec I make 700k...to do so the person needs margin of 800k...50% of the amount needed to buy shares...but they also collected a 700k premium...so they could only need to have $100k+700k premium for a total of $800k...so they need $100k...if this goes to $36...they make 600%...if it drops to $20...they need another 200k to buy back the put option for $16...so they lose 300k...if they just bought the shares they would have needed 1.6M...and could have made 700k...but that is only a return of 44%...or maybe 88% if they used margin...by selling the puts they could make 600%...and only lose $300k...RDWR not going to $20. Or they could have bought the shares and lost 300k...so I think the put seller is the smart one and will make a killing on the trade.

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    • I believe this theory will hold...the put volume at the $35 and $36 level is substantially higher than all of the call strikes below $36...so the stock moving to the put strikes will wipe out substantially more premium if it makes it to $35...or the $35-$36 put seller will have 110,000 share put to them and it appears that they are willing to take the shares if it does not get to their strike by then. at this point the puts that were sold at $11.40 in August...are not at between around $12.50 now...a loss of 64k, but I think the share buyback and earnings that are above estimates should help the stock rally to those levels...plus with zero interest in the board...it has become quite enough for a buyout rumor to pop...also short interest was under 100k shares for the first time in a while...so shorts have covered and are going long...i think the shares short dropped even further after RDWR touched below $20.

    • The seller of the puts is up 100k already....they will be up a lot more by opex

 
RDWR
16.17+0.01(+0.06%)Jul 11 4:00 PMEDT

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