Recent

% | $
Quotes you view appear here for quick access.

Intel Corporation Message Board

  • alexander.dumbass alexander.dumbass Oct 24, 2012 2:34 PM Flag

    Options: SELLING JAN $21 CALLS

    There is a large number of JAN $21 call options being sold at $1.21. 30k contracts have traded so far. Selling the ITM calls encourages the option market maker to hedge (prepare for getting the shares in JAN) by shorting INTC.

    By holding the CALL sell order at a constant price, INTC is capped on the up side.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Not exactly. It looks like they are trying to buy the NOV $19 calls for zero premium so they can exercise calls early and steal the dividend. The NOV $19 call premium at BID is zero.

      They will match those shares with zero premium in the money put options they buy. The put options at $24 and above for NOV, DEC and JAN are close to zero.

      IMO, shares will start going up when their is volume on ITM put options.
      -------------------------------------------------------------------------------------------------------------

      ok,i see, (it takes few times to read due to my lack of experience with options):
      1. they are buying NOV 19$ ITM that has zero premium
      2. they are buying the 24$ (or above) close to zero premium- in order to protect from downside ... (?)
      3. before expiration they will exercise the calls to get the divy and then they will ride the puts options..

      hope i got it right

    • I'm not sure what you mean being sold, someone else buys them as well :) The open interest is low , only 5545.
      beside the MM will go for the max pain if possible, so far he wasn't able to do that with the Oct max pain which was 24

      • 1 Reply to mystk7
      • When I look at the BID SIZE and ASK SIZE, the BID SIZE or number of contracts for sale at the bid price says 50. The ASK SIZE says 2,310. Earlier it was 50 and 5,000. The implied volatility is low (22) meaning their is more selling pressure than buying pressure. These appear to be SELL TO OPEN and tomorrow the open interest will 37k..

        BID/ASK is $1.15/$1.16

        I don't give much weight to the MAX PAIN target. MAX PAIN was created before online trading, streaming quotes and before the commision cost dropped to near nothing.

        My theory is that the option market maker hedges his position immediately and therefore does not really care about the max pain.

        If he cannot match the ITM call sell to open with another buyer, he will take the other side with the price is right. When he takes the other side, he can get the shares or not. For the ITM calls he writes, he shorts the stock for the calls he bought. If INTC goes up, he gets the shares to fill the short. If Intel goes down, he is short and breaks even on the premium for buying the call.

        IMO, this is part of a dividend arbitraging that will play out on Nov ex-dividend day.

    • So the buyers are speculating that 22.21 is going to be a good or great price in January, so the assumption is that INTC will be selling for 23.00 or more by January... Sounds great!

      Sentiment: Strong Buy

 
INTC
34.66+0.39(+1.14%)Jul 22 4:00 PMEDT