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Nuance Communications (NUAN) Message Board

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  • sdferrell sdferrell Nov 29, 2010 8:49 PM Flag

    April 11 Calls

    A lot of folks seem to look at open interest and try to draw inferences about what is going on. I am sure smarter people than I can actually do something with the information, but since open interest doesn't differentiate between buying and selling it is hard for me to draw any meaningful conclusions. However, I can tell you what is significant about the $20 April 2011 calls for me...

    Because of the recent price spike due to the buyout rumor, the $20 calls were paying a very nice premium. I own some long calls (Jan 2012 $10) and I think it is unlikely NUAN will see $20 by April. So, by diagonalizing the position and selling $20 calls, I hope to lower my cost basis and keep the Jan 2012 calls. However, if it really does climb above $20, the price appreciation (along with the premium) will still give me a very decent return which I'll be perfectly happy with, as well.

    Hope that helps,
    sf

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