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Genworth Financial, Inc. Message Board

  • teknowiz teknowiz Mar 8, 2013 2:07 PM Flag

    Why are June strike 12 calls so cheap?

    Going for 23 cents ask? I have been buying, but someone keeps writing.

    I dont understand the option writers logic. Yes it is 9% annualized return on GNW holdings, but then you are risking a lot of capital if there is market downturn and missing out a lot of gains if stock takes off beyond 12

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    • Several reason, if you"buy calls" you're paying 0.23 cents to buy a stock at $12, or take the profits "if" it goes up. Since the YE SP for GNW is 12.80ish, then a run from $9.80 to $12 by June is highly unlikely unless huge news comes down the pipe. So in reality, its a roll of the dice for .023.

      If you truly intend to take the stock long with options by June, then the $10 call would of been a better option...IMO. Plus you have less capital involved if you take the shares long with a much higher percent chance of winning.

      My 2 cents with 100% less spam!

 
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