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Arena Pharmaceuticals, Inc. Message Board

  • croesus_intervention croesus_intervention Mar 25, 2013 3:31 PM Flag

    Someone placed a huge bet today. A straddle involving 7200 contracts each on the April 12 Calls and Puts

    That is presumably a long straddle but who would buy those Puts for so much money right now unless they were absolutely sure the stock will be below 7 or 6 by April 20th? Or did they sell those Puts to buy the calls on the cheap and expect the Pus to expire worthless and the calls to be very pricey by then? Either way is extremely risky or someone knows the odds are in their favor for a huge spike or drop in price before the expiry date. Any options experts care to comment on that big play today?

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    • you would do this when you are out of shares to short and need some.....

      Reverse conversion - In a typical reverse-conversion transaction, a brokerage firm short sells stock and hedges this position by buying its call and selling its put. Whether the brokerage firm makes money depends on the borrowing cost of the shorted stock and the put and call premiums, all of which may render a return better than the money market with very low risk. In the context of futures markets, a trader would be synthetically long and short the underlying futures while looking for arbitrage opportunities.


      • 1 Reply to danny_2r_boyle
      • Games--its always games! its been going on for months!

        It simple for me--with cash hold my core and buy shares to trade everytime they drop this with their games and then either flip them higher for profit or sell some and keep some, adding to the core while never selling any original core. Then you ignore the oscillation in terms of the PPS cycling, knowing the news is coming on many fronts! They can straddle this! And it works too!

        Bring on the news!



        Sentiment: Strong Buy

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