Options pricing question. I just saw a disturbing flip in premiums that might signal a reverse.
I have been tracking the basic materials play in KRO and bought a strangle in december. Then it pleasently began to rise well into profitability with steady upward charts on strong volume. Then as volume weakened I saw the signature HFT undulations in the chart. Now as it was last night, at-the-money premiums for feb were at a buck. Today during an hft undulation, the premiums flipped down .50 for the calls and up .50 for at the money puts.
So, it went from 20/20 c/p 1.00/1.00
20/20 c/p 0.50/1.50
and this is during a rise in price. The market did the opposite of what one would think.
I think they are planning something big here. Encourageing the selling of puts and the buying of calls only to trap them in a tank. This stock has a history of unusual moves like this.