An interesting disconnect; AUY share price vs Jan 2016 $20 Call option
AUY down today by 0.27%
Jan 2016 $20 Call up by 88.89%
Volume was 150, range was 0.17-0.18
Call price on June 2 was 0.09, volume data can’t be provided for that date.
Does somebody know something nobody else does and is trading on it illegally?
This type of trading has been seen in the distant past when Santa Fe International (SFI) was the subject of insider trading by Kuwaiti insiders, including connected “royal” family members and an accountant who was asked by a board member of SFI for tax advice on a large increase in value of the board member’s shares. Of course the Kuwaiti’s got away with the loot. The American based accountant wasn’t so lucky when he put 2 + 2 together and bought call options that would have made him a millionaire, except for the fact that he got caught. It just so happens that the accountant was an acquaintance of ours. He and his wife (also an accountant) got what they deserved. But it’s just another case where “important feriners” get treated like the corrupt un-sanctionable royalty they represent. So now you know how being treated “royally” places some on the same basis as “diplomats” with immunity from prosecution.
The case for SFI was easy to spot on a share price chart, which wasn’t as widely available until the advent of the Internet. Engineering and construction companies were in a downturn, yet SFI was exploding upwards.
On the other hand today option charts are still not widely available except through brokerage firms. Yahoo, for example, has a spot on their daily option quotes for historical prices, but chooses not to provide the chart in the space provided, leading to the suspicion that to do so would not provide cover for illicit trading activities.
Anyone who thinks this country runs on ‘the rule of law” doesn’t have a broad understanding of the meaning of the term and therefore is unlikely to understand the depth of the country’s corruption.
The January 2016 20 call is a thinly traded option with an open interest of only 2,779 contracts. The bid ask spread is quite large because of the relative illiquidity. Large divergence in price on thinly traded options is very common. At the close of trading today it had narrowed to a bid of .12 and an ask of .21. The quote from June 2 was simply the last trade and not from June 2nd. It was probably a sell trade when AUY nearly hit $7.00. The subsequent trade was from when someone wanted to buy in and they bid slightly into the upper end of the spread.
You’re the expert on options. They wouldn’t be traded here because price is too easily manipulated. But they do seem to have some predictive value.
As far as your claim that this particular option is ‘thinly” traded, it is a LEAP, and at this point has high open interest compared to what it probably will be a year from now (20,000?). That makes it particularly risky because it attracts manipulative interests on the writer side to have most of the interest expire valueless. As far as this sort of trade being “common”, the question should be “common” to whom?" And that is why it is suspicious. Note that the volume of 150 has again posted which may be an indication it is from a single source. This could be an indication of inside information on a potential buy-out of AUY; or maybe it’s just a dufus with more money than brains. Stay tuned.