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Stadion Tactical Growth I Message Board

astuteinvestor1 2 posts  |  Last Activity: Apr 15, 2014 9:41 AM Member since: Aug 15, 2013
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  • Reply to

    June and August calls

    by zeeman123456 Apr 14, 2014 3:30 PM
    astuteinvestor1 astuteinvestor1 Apr 15, 2014 9:41 AM Flag

    My takeaway from your statement is that the June / August $2.50 calls are grossly overvalued. For example, let's assume the the ADCOM/FDA news is widely favorable in June and ETRM trades up to $4.00.

    Buy ETRM today ETRM @ 1.56 today = 156.4% return ($4.00 / $1.56) -1
    Buy ETRM $2.50 August calls @ $0.50 = 100.0% return ($4.00 / ($2.50 + $0.50)) -1

    It's much more attractive to buy the equity than the grossly overvalued August call options if you are bullish on the ETRM story.

    P.S. Were your also lurking on the Seeking Alpha website this AM?

  • Reply to

    June and August calls

    by zeeman123456 Apr 14, 2014 3:30 PM
    astuteinvestor1 astuteinvestor1 Apr 15, 2014 9:13 AM Flag

    A spurious argument given that roughly 75% of all options expire worthless according to a study by the CME.

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