Had an idea and want to run it by the board. DT will go ex-div on or about 4/28, right? So it's almost a lock DT will go up between now and then, then sell off sharply right about ex-div. (anyway, that's my opinion.) My idea, instead of snagging some shares now at 13.30, buy a ton of MAY 12.5 CALLS on DT for about $1.00 and close out before ex-div. If DT goes up a buck in the next three weeks, I'll double my money. Say you have $10,000 to invest. You could buy about 750 share of DT with that money, or you can buy calls and control TEN THOUSAND shares between now and ex-div. Would appreciate any intelligent critique of my idea. Am I missing something here?
Clearly your potential option strategy would not have worked...very interesting and odd action on this stock over the last month.
I do not remember the math for how dividends affect option pricing, but it is very odd that the prices on $10 calls are essentially the same for May thru October. Would paying the dividend quarterly change this? I guess this could also be a function of lack of volume of options as well as the future de-listing...I just find it odd.
DT seems stagnant but it may be interesting if the stock falls to 13. Euro currency is so weak that it is a tough call option. Prefer the puts as this dog could not go up when the DAX was up by 1.5 percent.
Its not the worse idea, but short term options are all about timing. Look at last years chart, this company spiked down a couple of time in the last month on basically no news. I was playing the same idea and it never worked out exactly as I hoped but by having stock and being nimble I was able to make money...of course not as much as if I caught the options just right. With the stock you can always ride out the ups and downs. With options price decay makes this impossible.
I am not saying don't use options but to bet the whole 10K is very risky...one poorly timed press release and you are out of everything. I would go 2/3 stock and 1/3 options with a 10K "bet." And I would not buy the options or stock all on the same day...roll into it.