That doesn't make sense unless those buying the options believe there will be some sort of settlement before the decision?
I sold on may-21( a bad trade,just before Quebec court verdict)june-36(cdn) puts at $0.95.Tomorrow afternoon,I will try to close half of the position probably at a loss and keep the remaining position.
First of all, I think you should not do anything in an emotional or "rushed" state. Sounds like you're trying too hard. That's usually when we make bad decisions. Keep it simple. You can't have your cake and eat it. And make sure you don't risk too much no matter what because it's PURE speculation at this point. It's a bet - not an investment.
I was lucky today. Someone was asleep at the wheel, and I was able to sell a few of the Dec 30's at $1.90! They're bid at $1.65 now.
Here was my thinking...why would I own the shares when I can get the exact same upside by selling the puts (at a 2:1 ratio), a superior "middle scenario" (i.e. if the SP stays > $28 app., which is my net b/e, I don't lose money whereas being long the stock I would), and only a slightly worse downside if the SP collapses completely - which I doubt will happen. Would I mind owning BCE at a net cost of $28? Nope. Not at all.
Thanks.. Just not sure how I want to play this, and which direction I want to lean my trade to.. I feel good about a pos. outcome, but my gut just doesn't know..
This is the most posts i have ever done.. damn...
Oops...forgot to mention downside.
If the bondholders win, it won't immediately go to the lows, because there will still be some who will be looking for a repricing or a deal with the bondholders. So I could see a little under $30 let's say. But if they then announce the deal is off, we'll probably go below $28. I dont' see much more downside than that. My worst case scenario is $25. I'm prepared for that.
Because even if THIS deal fails, there are others that will take a run at BCE at some point, and between that and the dividend and the share buyback, etc., there is decent support underpinning the SP.
I don't think the downside is as great as the conventional wisdom. It's not as risky as some believe. We're talking about BCE.
Thanks for the response..
I am struggling right now to cover all my bases... You said that you see this closing at the org. offer... what timeframe do you think???
Also, even though we are both on the same side of the trade, what is the downside of a neg. SC vote???
Thanks, and good luck..
Disclaimer: Remember...these are only my opinions (i.e. GUESSES). I could be completely wrong, so do not misconstrue any of my opinions as ADVICE.
Currently, I am short the Dec 30's. I've sold a lot of puts on BCE (Cdn and US) for many months now. So far, I've done very well.
The options are difficult on BCE because they are normally very thin on the USA side and ridiculously priced (sometimes MISpriced ;) ) oin the Cdn side. WHich is why I have not "traded" them - I've always held till expiry to reduce the cost of spread, etc.
I think your $37-$38 US is very likely. That was the range I was thinking (about $38-$39 CAD). If the bondholders lose, they will launch another lawsuit (which will go nowhere), and then there's always the possibility that the banks will drag this out further (but ultimately will finance). They'll work it out with the banks. Contrary to most, I do not think this deal will be repriced. Remember, Teachers has that big fat dividend that they wouldn't be paying to offset giving the banks more favourable terms.
I'd be a buyer at $38 on Monday (still 12.5% left), so that means it'll probably open higher. lol.
What a soap opera.
I checked with the options desk trader and it is true that big institutions have to 5.00pm to exercise their options,small investors cannot do that.I think it's wrong for the court to release the information while some people can trade on it and others cannot. Judges should know that.
"Judges should know that."
There are a lot of things that we presume judges "should" know. Sadly, my estimation of their savvy went down about 5 notches when the Quebec ruling came out in favor of the bondholders. And if the SC doesn't decisively overturn the Quebec court decision (and fast), Canadian judges are sure to lose a lot more credibility.
I have already done that.. once again, that is why i called and talked to the options desk, not a broker...
1. they said that is why you need to close out options before the market closes on friday.. just in case there is afterhours news...
2. why do you think the prems. are so high on these when we know the news will not be out until after the market closes.. you know this stock is not going to move much until the news is out..
3. re-read my post from AMTD..you have the option to exc. OTM or decline ITM option until 30 mins after the close (AMTD said they would 1 hour)