One flaw in your logic
Once the news comes out...the options premium will crater...so you'd likely get little for a future option trade.
Writing a put is bullish...but writing a straddle is betting on lower volatility and smaller share price movement.
Maximum gain for a straddle writer is if the stock ends at the strike price.
In my earlier example, I would not get my fanny spanked if I wrote a May $25 straddle as I would have taken in $22-$24...so if the stock goes to $5, I would actually still make a couple of bucks.
As tempting as that is, I am not doing that as if the stock goes above $50, I would be forced to cover on the call side and it could cost me a bit.
writing a straddle is making a bet that when the smoke clears and the risk trade is no longer on, the stock is still going to be 'somewhere' in the vicinity of the strike...but you don't know on which side. So whether the stock ends $5 or $10 bucks above or below the current price, you made good money on the trade.
"There s almost zero risk to the downside". That is actually very true. If the stock goes to zero and you took in almost $24 in premiums, it's essentially a wash. I addressed the risks of the stock going the other way.
That's what i was thinking....except maybe writing May $40s.
So if someone sells a May $25 straddle, they collect between $11-$12 on each side. There's almost ZERO risk to the downside...The risk is actually on the upside...if the stock goes above $50.
Otherwise, another play is to sell a covered call with the significant premiums for strikes well out of the money.
Anyone playing it this way?
It's always nice to pontificate as to "why" earnings announcements come at certain times.
But the story behind whether announcing pre-market vs after market, early in the week vs later in the week, or early in the reporting range vs later in the range has been analyzed and debunked. Generally, when a company chooses to report earnings has no bearing on whether those earnings will be good or bad, or whether there might be some important updates to disclose.
Fun to talk about, but really no bearing on anything.
Where do you guys come up with this stuff?
The drop in price was due to Axiom's report that the YIELDCO was a 'bag of bad assets'. Look at the news and the timing of the news.
As for earnings, it's NOT all about APPLE and the YIELDCO.
No reason?? Both SCTY and SUNE came out with disappointing earnings. I think the stock has done alright this morning considering.
The premium doesn't disappear. The spread on the bid/ask is even more pronounced with a lack of liquidity. So if you are trying to close your position you may not get a great price. Right now the options may be showing some wacky numbers in your account...your brokerage firm might show the average price (between the bid and ask) as the current value. And there could be a spread of $3 or more.
Best bet would be to hold to expiration (if you don't mind holding)....let them exercise and then make a decision about holding vs selling the stock. Of course you'd need the cash or margin in your account for that.
Options are no longer available for ADES. For anyone with an open position, they may still execute closing transactions. So if you are long a put you may sell it. If you are short a call, you may buy it back. Closing transactions only. For your particular set of options, you can probably just do nothing and they will expire worthless to the purchaser.
Possibly, but not likely...not yet. Bear in mind the company is going to the PINK sheets. That's the lowest rung of the OTC ladder. It allows companies the most leniency and freedom from reporting/filing requirements. It's kind of like 'death row' for stocks. So that alone will even keep most folks away from buying.
Also, many (including me) have serious doubts about ANY information that has come from the company. It could all be BS. Did they really lease the # of plants they indicated? What level of revenue are these plants REALLY producing? Are they really in talks on the other plants? And so on. My money is on 'I have no idea, but I don't believe them'.
To Beavis and But-head (mercury and Oily) who seem to get off posting stupidity and giving each other 'thumbs up', they'd have you believe this is all KPMG's fault. As if a professional organzation like that is the culprit and the folks at ADES are the victim.
A year wasn't enough to get things in order, even throwing a large # of people at the problem along with a Chief Accounting Officer, Compliance person and whomever else they used to window-dress. Now in their filing they still say 'they intend to refile for listing' and 'will restate as soon as practical'...that might be another year. On the pinks, there's literally NO rush for getting everything together...they could sit here forever.
In the end, I don't know what really IS going on in Denver...I think the 60% haircut has priced in fairly low expectations, though there's plenty more to drop. I can't imagine Durham is ok losing as much as he has on his stock position...but who knows...I'm not him
So after having some time to digest last week's bombshell, I think things are clear:
1) There's nothing that's been put out from this company in the last few years that can be relied upon. From the # of plants sold/leased to the revenue #s to the expectations, it's all questionable. Therefore for anyone to try and derive a fair share price or book value is ludicrous.
2) There's some level of blatant chicanery going on. If that is proven to be true and widespread, I will be near the front of the line to make sure these guys pay. I'm a risk-taking investor and I can handle when a company rolls the dice and loses, but not when they are engaging in unethical activity.
3) It's time to move on from this investment. Having begun to unwind my position on Friday, I likely will have little or no position in the coming days...NOT worth the risk anymore.
On another note...I appreciate some of the posts by many of the longtime members. I will publicly state that Mercury Buster is an idiot...and likely a shill for the company...as his posts are just plain stupid. Many years ago I felt there was some value, but that has been evicerated by his posts of recent days/months.
What a bunch of want-wishers. What is the more likely scenario here...
There is some grand conspiracy cooked up by Goldman & hedge funds to crater the stock price so they can pick up shares cheap, OR
There has been an extraordinary level of malfeasance and deception from a group of corporate executives who have proven in the past that they are not credible enough to run a carnival tilt-a-whirl.
Sorry Oilly...no sale on that.
Great for a long shareholder to hope for, but not likely