American Capital Agency Corp. Message Board
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The Jun32 puts - what the
Ok, this makes no sense to me. What in the world happened with the Jun32 puts?
Today the stock price drops $0.33, and the puts lose $0.05? Is there any explanation other than severe buying pressure?
What, are we going to see the puts have 0 value when the SPO drops the price by a $1? *shakes fist in the air*-
The Pied Piper dumped..!!
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People were bidding them up all day yesterday, and the last 15 minutes saw someone buy at .50, but probably only the one trade.
Today they opened in line with most of yesterday afternoon, and stayed there all day.
So I think people were betting bigger that last night would be the SPO, and weren't so sure today even with the stock price dribbling down and the Fed making noise.
If you want to see serious schizo, look at the price change in the Puts on Monday night to Tuesday morning. The stock of course drops due to the div, but the Puts, which are not adjusted, also drop.
And for a really magical time, watch how the September 33 calls went _up_ due to the div.
It's the result of relying on the equations to make trades instead of understanding the stock. These folks also seem to have made bets that were much bigger than the usual volume, so when it moved against them they were trapped and amplified their own problem as they tried to bail.- 1 Reply to yourbestfriendintheworld
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"If you want to see serious schizo, look at the price change in the Puts on Monday night to Tuesday morning. The stock of course drops due to the div, but the Puts, which are not adjusted, also drop."
This is due to arbitrage. If the divvie did not disappear from the share price, everyone would just cover to protect the shares from the divvie drop. Or to put it another way, whenever a potential windfall is available, because the price of the option has fallen to low, these puts are purchased until they are back in line.
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Err, selling pressure.
- 1 Reply to engie095
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Double err. July 32 puts. haha
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