"The option makers are going to screw around with Intel and there's nothing anyone can do."
I think the option market maker may be a victim. I might be wrong. I think that there are others pulling the strings. During the first week in November 2011, the number of FAILS TO DELIVER shares in Intel jumped from 10's of thousands to 11,000,000 shares in 1 day. The day before ex-dividend, the very deep JAN calls traded 600,000 in two different strikes. I think they exercised call options early to capture some shares across the ex-dividend day.
Many times the option trading is VERY heavy the day before ex-dividend. At the close,
the stock trades without dividend
The put has more value
the call has less value
IMO, someone backs the option market maker into a corner.
If you want your head to spin, Google "Intel Reverse Convertible Notes " and read about the financial instruments that Barclay's issued against Intel performance. They are even crazier .... a "convertible bond" but more like "put" than a normal convertible which is like a "call" option.
The current state of the debt is reported every quarter in the 10Q as one of the Notes. Search down for "Convertible Debentures" ... most of it is readable.
after checking again .... I think they are callable in 2019.
"On or after August 5, 2019, we can redeem, for cash, all or part of the 2009 debentures for the principal amount, plus any accrued and unpaid interest, if the closing price of Intel common stock has been at least 150% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading-day period prior to the date on which we provide notice of redemption. We can redeem, for cash, all or part of the 2005 debentures for the principal amount, plus any accrued and unpaid interest, if the closing price of Intel common stock has been at least 130% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading-day period prior to the date on which we provide notice of redemption. If certain events occur in the future, the indentures governing the 2009 and 2005 debentures provide that each holder of the debentures can, for a pre-defined period of time, require us to repurchase the holder’s debentures for the principal amount plus any accrued and unpaid interest. Both the 2009 and 2005 debentures are subordinated in right of payment to any existing and future senior debt and to the other "
"The conversion prices have been exceeded. So haven't these bonds been converted to stock as per your numbers?"
Actual conversion happens when the bond matures in 2035 and 2039. When the stock price exceeds the conversion price AND the EFFECTIVE bond yield exceeds the dividend yield in 2005 and/or 2009, the bonds are candidates to be used as collateral against a short position. The bond and short neutralize each other, there is fixed, 100% guaranteed income AND the investor can redeploy their cash again.
Few would short when Intel was AT the conversion price.
More would short as the delta above the conversion price became larger, to lock in profits and income .... risk free.
Junior subordinated convertible debentures due 2035 at 2.95%
2009 Junior subordinated convertible debentures due 2039 at 3.25%
When Intel sold their convertible bonds in 2005 and 2009, they created a group of short sellers who bought and own these bonds. Hedge funds have large holdings of these convertible bonds and can short and cover against the conversion without worry. That leads to arbitraging and narrow price movements.
Intel sold $1.6B and $2.0B of convertible bonds in 2005 and 2009. The original conversion prices were dividend increase protected. Every time Intel raised the dividend, the excess dividend reduced the conversion price.
The initial rates were 2.95% and 3.25% but with the extra dividend, their effective interest rate is now 6.45% and 7.20%.
January 1, the conversion prices were down to
$2.0B of $21.71 per share = 92.1 million shares today
$1.6B of $28.61 per share = 55.9 million shares today
148.0 million shares total today from the two bond offerings
Do you think the analyst calculated an expected 70% from the recent Samsung 14nm price drop or from an unnamed source? Samsung has declined to comment on yields. How believable do you think the number is?
“TSMC's monopoly on leading edge has been broken thanks to Samsung's successful ramp of 14nm with current yields exceeding 70%,” said Mehdi Hosseini, an analyst with Susquehanna International Group. “Samsung has effectively become as good as TSMC at 14nm while offering a much lower ASP per wafer.”
A favorite center price point of the narrow trading range seems to be at the OPTION STRIKE + DIVIDEND. These narrow trading ranges become more apparent as we approach the ex-dividend date (next one ... May 5th).
Today, that is $32.00 + $0.24.
Cowen and company raised a couple of good points about the ASML contract to a US company.
1. EUV was targeted at 7nm but ASML had good results
2. Strong dollar combined with weak Euro makes for a strong currency discount on the equipment ... The Euro has dropped from $1.40 to $1.07 over past year. ... 1/3
"A covered put is a sell of puts against short shares. "
I was also thinking of a "cash covered" put which is also a "covered put" but your definition seems to be the one defined.
The open interest did not seem to change. according to my screen this morning.
" they sold for 9 dollars "
Hmmmm. I do think that it was a SHORT PUT(covered or naked) which is a "BET" on a price FLAT or UP.
If this was the mate for the 4,000 contract pair also last week, they could have closed the position recently opened. There are also a number of ways to 100% hedge what appears to be some sort of option STRADDLE.
DIVIDEND ARBITRAGE? .... The option expiration day of mid May is beyond the EX-DIVIDEND date of the first week in May. The dividend drop pricing is currently tilting toward the puts.
It did not appear to be a simple "BUY TO OPEN" put trade though .... IMO.
There were 4000 $40 May 15th put contracts traded.
There were 4000 $40 May 15th CALL contracts traded, also.
This is also the SECOND PAIR of 4,000 contract May 15th $40 trade. One was about a week ago.
They are linked.
The BID/ASK spread on the PUT options is very wide at about 80 cents: BID/ASK $7.20/$8.00
The "LAST" price was $9.02 for the PUTS which is likely what ALL the puts traded at.
The "LAST" price was $0.02 for the CALLS which is likely what all the calls traded at.
NOTICE: that the difference between the CALL and PUT contracts is $9.00 exactly.
DID they BUY the puts and SELL the CALLS?
DID they SELL the puts and BUY the CALLS?
Why? Please explain. 8-)
"Apples mac marketshare was 13% last year."
Correct. Apple market share of PC was exactly 13% last year. I think that their increasing share of the business market was the cause of their good showing and not the halo effect but ... iPhone halo may be the catalyst for business adoption .... I looked at their phone, tablet and MAC market shares and they all seem to bounce in the 15%-20% range so I took way too much liberty with my rounding .... oooops. Thanks.
"People will find that phones are just not worth paying $600 "
The "Appleholics" will not blink at $600 but if it does not have $600 value to the general customer, they will not pay. I agree. If Apple cannot create incremental value for the customer base, the product becomes a commodity, Apple will have a swarm of competitors and the margins will approach "very thin".
The Apple MAC has about 15% share of the PC market. The 15%-20% market share of the high end seems to be about the percentage of "Appleholics" (fun word ... not disparaging) in the general population. They buy Apple and only Apple. That may change in the future but that has seemed to play out in the past.
Intel management has indicated on multiple times that the Intel foundry would fabricate the Apple part for Apple products. Apple could keep their ARMH-based design and they could solve their supplier issue.
Wouldn't that solve Apple's long term silicon supplier problem? A 1st tier ARMH design would be built on the latest processes.
IMO, ... and only my opinion ....
I think that Apple will stay with their internal custom ARM design unless their is a compelling reason to switch. I think that substantial performance/watt improvement would be the only reason for them to switch. I am not sure that an x86 design will be able to make a substantial difference in the HOURS between charging spec.
Servers ... someone (even Intel's good customers) will dump some money into the server prototyping businesses and continue to look at startup companies products .... SO THEY can have a lever to keep Intel prices down. Customers do not like to be sole sourced on a product .... especially one that is only built by one company.
"[What are you - the new apologist for ARM? LOL. You're saying that ARM's presence in an Intel SSD is going to solve all of ARM's problems? Really???]"
No. I just pointed out that at least two ARMH customers were building products on a leading edge process. So ARMH customers have designs on leading processes today and likely in the future. Since that conflicted with your statement, I tried to clear it up.
I asked a question because you said something that did not make sense to me. Your reply starts and finishes with insults. You seem to think that any question is an "attack" on you. They are not.
Cheers and relax.
"The road and the roadmap have run out for ARM as their ability to operate at the highest end of technology has ended."
Are you talking about ARMH the company or the ARMH customers who build ARM based devices?
Intel uses an ARMH CPU in its 750 SSD 20nm drives which start shipping 4/28. That is Intel and MU leading edge.
Since Intel uses ARMH CPU in its devices AND Intel has announced 14-nm ALTR 64-bit ARM-based FPGA devices, ARM is on the leading Intel node.
I think you need a couple more qualifiers on your "ARM's Insurmountable Problems" subject line. It appears to be incomplete.