I think this might help explain some of the recent weakness in share price, though it's for bonds issued back in April, and it appears that they were used to refinance Transocean's notes on the rigs.
And how they avoid/limit margin calls, allowing them to gear up for periodic bear raids until the marketing partnership (or buyout) is announced.
All these answers, with bits of helpful info and insight, but what really matters is how many, if any, of the $10 calls are exercised, and if the OCC chooses your shares (not your calls) to be called away. Doesn't matter what the closing price is, or the AH price, or who you sold them to, as if that could be tracked, nor what he/she does.
It depends on if you think that 20 is the upper limit for the stock, or if you want to hold the stock for possible additional gains. And, if you've got the cash/margin to exercise all 200 of them ($100k).
Of course, you could always sell some of them, use that cash to exercise the remaining.
Or, you could sell the weekly OTM calls against them till January, and possibly build up enough cash to exercise the 200.
It's obvious, Auntie, from your above posting that you don't really understand how the options market works. To explain in simple terms, you probably bought those calls from the Specialist, who immediately hedged his sale to you by buying shares for below $5. So, if and when you exercise, it will probably be against shares that were purchased below $5, thus whoever gives you those shares for $5 is doing so at a profit. You will not be "sticking it to him", and he will not "sing the blues big time". Face it, Auntie, you can not beat the Specialist/MMs. Just enjoy your good fortune without thinking you need to hurt someone to gain something. So un-ladylike of you.
The OCC gods smiled on you. Bet just about every Friday involves the MMs trying to pin it to an option strike for a while here.
Doubled my position. Been waiting for a buying opportunity for a long time; was close to giving up waiting a few days back and almost pulled the trigger near $40. Like it a lot better at 37.78. Thanks, Mr. Market.
Might have pulled the trigger a little early, but had a meeting I had to run to, and still happy with the buy today. If this gets down to $34 like you say, barring any change in the fundamentals, I'll be buying a lot more.
Looks like you closed that position a day early. Probably should have just let it ride to expiration and expire worthless. But, $34 is so far out of the money, anyway. There's a lot more of the hefty dividend to be gained by selling closer to the money, and further out to cover at least 2-3 dividends.
Selling naked puts is very bullish ( i.e. long, not short), as much as, and perhaps moreso than, going long the common.
Interesting sequence of events. . . raise the dividend by 10% then 3 days later, issue a secondary diluting another roughly 10%. Not sure if I like this too much . . . but will have to hold on for the ride.
In the absence of news (good or bad), I was thinking the MMs/specialist are trying to get this down below 10 for option expiry. Beyond that, I'm really wondering . . . . almost tempted to buy a little more here . . .
Yup, know what you mean about wishing I'd been trading this stock, rather than doing a buy and hold on it. Have developed a real feel for these moves around op-ex. Seems they were trying to drive it under 10, were successful, and are now seeing just how low they can take it. Take out the 9s completely, or get some of those holders to bail instead of exercising, meanwhile keeping/building their inventory in the underlying. Too many (trading) ideas, not enough time, especially with a "real job". :-(
Timing's not odd to Carl. He needs $140 million to do some other deal. Having this guy around has its positives, and its negatives, big time. CVI has become one of his piggy banks to bust into now and then.
Onan X, your logic doesn't seem flawed, nor does your arithmetic. There's probably another $800 or so in interest for the last quarter. In any case, the bondholders seem to be getting rewarded for their earlier confidence in SDRL/JF in this conversion, considering:
PPS at bond issue (10/25/10): $30.56
Original conversion price: $38.91
Total Dividends since bond issue: $12.815 ("missed" out on by bond investor)
Conversion price adjusted downwards with every dividend, though not exactly in the dividend amount.
Question: Why would JF feel its better to pull the trigger on the conversion now rather than later, and on debt at 3.375% rather than the other bonds in the 5.625-6.5% range? Wondering also who bought these bonds. All these thoughts seem to indicate an expectation of a higher PPS in the near to mid-future.
15s look like a sold straddle, both 8750+ calls and puts sold, as the premiums are closer to the bid than ask. This could be coupled with some of the action in the lower strike calls, as almost every strike from $9 up has some good volume. (Selling the 15 puts, holding them with the sold 15 calls, and using the premiums from the sold puts to buy the lower strike calls.)
That's a lot of insurance, BigBear. A hefty premium. Hope you're selling nearer term puts at a lower strike to try to recover some of that premium, ior you're just making the MMs rich.
I got in at 19+ also, and I'm still kicking myself for not buying more. Keep watching it, and saying I'll buy on the next dip, but it still hasn't come. At the very latest, will probably buy just after next ex-div.