Your computation was almost correct.
At 25, the strategy will make $6,250 or $1.25/share
At 11, the strategy will make $6,250 or $1.25/share
The last part was not correct though.
At. 18.5, the strategy will still make $6,250 or $1.25 per share. You broke even with stock. You will lose 4.4-3.15(5,000) or $6,250 on the Call but make $12,500 on the Put.
As I said, this strategy will be excellent for Brokerage house who are not required to put up margin on the short but still able to use the proceeds of Shorting the stock.
Thanks for your input.
No. For small investor, I am not sure whether I can benefit from the proceeds of these trades. Brokerage house may even require you to put down money on the short sale of the stock. But for the big boys, these could be a no lose strategy. I know Big Brokerage Co. can create Synthetic PUT to sell by Selling Short the Stock and Buying Calls. But I presume the net should be close to the strike price of the Call and Put.
At this moment, I noticed that Rig is 18.27-16.28, RIG160115P15 is 2.5-2.6,RIG160115C15 is 4.1-4.4. This looks like an inefficient market.
You can SELL RIG 18.27
BUY RIG160115C15 4.4
SELL RIG160115P15 2.5
This will result in Net Proceeds of 16.3
You can make money when the market becomes efficient. This strategy should net close to 15 before expiration.. At expiration whatever the price of RIG, it will always yield 15
Yes, we had a pro in the person of Lyle. He sunk $21 M of our money in Rock Ohio without accountability. That was $2 per share. The deal was supposed to have confidentiality clause. Nobody knew how our investment was lost. We just have to take Lyle's word.
Thanks for your reply. I think there is monetary incentive for Penn Central to enter to this kind of deal. They can add the $60 M to Jamul's debt to them and they can negotiate with LACO for a reduced price and pay the rights with their stock.
I think LACO should monetize now the Jamul casino notes by spinning off rights before the merger with Gaming. There are 13.39 Millions shares outstanding so 13.39 millions rights can be spin off to current stockholders representing the $60 M debts.
Thanks for the info. I have been unable to get a picture of the Construction. I remember when LACO was building the Red Hawk Casino close to Sacramento, you could see a live update of the Construction daily. What is the chance Jamul Casino succeeding? What's a realistic conservative estimate of our investment in Jamul worth?
Does anybody know when CXDC will report 4th Q earnings? June 30 Q was reported August 12 and September 30 Q was reported Nov. 13. Should December Q be reported already during the middle of February? Why the delay? Will this explain the performance of the stock since the beginning of the year?