Feb $40 1000 calls and puts. Pretty late in the day to create phantom shares. I still hold to the MM's /broker dealers being caught off guard and naked shorting this am . They just created 100k in shares,not close to the amount needed to control VHC today. This seems to be just added insurance for later today.. By the way I just post this stuff to keep our board informed. Not much we can do and some of it is speculation and some JMO
No problem Willard.
Thanks for your response to my post. I guess I was a little off with my thinking in regards to my statements earlier regarding RC's. My assumption had always been (and mind you, I dont trade options), but when a RC was done, they would buy say the february 40's calls, and exactly offset that with putting the 20's in the same month. That is where I was coming from with my statement about the stock staying 'in between' that spread.
I'm pretty sure you have posted such similar trades when calling a RC being done. That there was always a corresponding 'put' done with the 'call' that was 20 to 30 dollars less than the call. You are saying this is not always the case? That a reverse conversion can be done at the same strike price for both the put and the call, in the same month? I'm not sure how that makes sense, but then again, I don't understand options very well, nor do I care to. I have no doubt what is going on is illegal, and that no one is going to do JACK about it.
Either way, my patience is wearing thin with the shenanigans in VHC. I can sell right now at a gain of 45% over the last 9 months, and may very well be taking that gain before the end of the week.
Morning Brad..The way to spot a conversion is when the strikes are the SAME. ( both $40 for example ) In order for the MM to be neutral he sells puts to the person the shares are created for and buys calls from that same person. It is done in the same month and strike. When you see the same quantity of calls and puts but in different strikes (exam. $20's and $40 )it is usually some kind of spread or a collar of sorts. Hope that helps a little. Yes the concepts and workings of conversions are a little tricky and creating shares to manipulate a stock is illegal..Coffee time here in So Cal.
Willie, I have noticed you post about conversions quite a bit. If I understand the gist of it, it's just a way for the shorts to find more shares to short when there are none (or very few) available through the conventional brokerage avenues. But here's my question---even though it hurts us (longs) in the short-term when they do this, won't they also have to eventually cover like a normal short would? If so, in theory, wouldn't this actually help us in the long run, as there are more shorts out there now that would need to cover when all the really big news starts coming in with Apple and Cisco? (whether it be injunctions, settlements, or a buyout)
Great question alikik. There has been much discussion on how and when these shares get covered. Technically you are correct that these shares need to get covered like all shorts do. Some discussion about covering them in dark pools or after hours as the did the other day where 80,000 shares did not move the pps but a few pennys. If some of that is going on then the covering is more muted then we would expect. Its impossible for us lowly retail folks to know what tricks are going on. If they are not covering and holding naked shorts ( which I believe there are many )they will eventually get caught with those shares on a big move up. I may post to much info about these conversions but I do it to just keep the board informed on the desperation of the shorts as well as maybe being prepared for a move down if someone wants to add or trade shares. Hope I am not posting to much about these conversions., if so apologize
So essentially there is a 100% chance the price will not be over $40 at the February expiration? As nobody would make such a brazen play unless they KNEW for SURE what Apple and Cisco were planning on stalling. I cannot believe this is allowed to go on and on and on. The SEC is a joke.
brandan remember its a balanced trade, both calls and puts with the MM's being neutral. If the MM's put the trade on them selves they are covered. The trade can be taken off at any time so not really a bet that vhc will be at $40 by Feb 19th....Shares created just to short, thats the only reason for these conversions.
willie7 I bought more (200) this morning on the dip. Have you looked at GS sigma X they trade after hours and do not show their shares trades on the books. Interesting there are more than just Goldman Sachs Sigma X.