On options, I couldn't disagree with you more. High premium indicates that the volatility is already in the option price, and the time decay eats everyone who is not a PhD in mathematics alive. High premium option bets are for suckers.
DDD has had a 25% borrow for the last few months yet someone holding it short in that timeframe did not make a profit, as the borrow cost offset the decline in value. That high borrow cost means you need to hold for a short time period and time the short absolutely perfectly.
I think you would be better off in DDD buying a put that is well into the money. The premium in this case would be less than the borrow cost shorting outright.
I looked at the borrow rates on Interactive Brokers to short DDD, and they are astronomical. IB wants 25% interest rates to borrow DDD to short it.
The stock has enough capitalization that this is pretty remarkable. Can someone explain how the borrow rates have gotten so twisted?
The interesting clue here is that the preferred shares are climbing in value at the same time the common is selling on high volume. Maybe they are going to dilute the common? That strengthens financial position and better protects the preferred dividend.
Which vendor has good day charts - with different timeframes selectable - showing current pricing for day rates for crude tankers and product tankers?
bigbear I think you have it reversed. Tanker stocks went up because oil went down. Tanker stocks are under pressure now because oil is beginning to move back up.
Low oil prices meant more contracts for using tankers for offshore storage facilities. Oil at low prices increases volume demand, hence increases tanker rates.
I think that just side steps my questions. I understand small brokers sell for a premium because this is a buy out environment. The issue is that NHLD is having to completely modify its earnings profile and no one understands (yet) what their revised earnings will be. That creates doubt about valuation even if you understand what the metric should be.
Here is a devil's advocate argument, and I would appreciate your countering it.
As part of the uplift to NASDAQ, NHLD had to give up its most profitable alternative product business. Dec 2014 quarter reflects this with very low 0.5M earnings. If that trend continues, they earn only 2M per year, which on a forward basis puts them at a PE of 20 against the current share price.
They are already trading below book, but you could imagine the market only giving them tangible asset value and maybe writing off the goodwill, so unlikely book value is a protection when the earnings are in doubt.
I'm looking for a new convertible. I'm not discussing the convertible that matures in April.
Does DHT have any public debt, either bonds or preferreds?
I'm trying to find a crude oil tanker company with recently priced convertible bonds or convertible preferreds. It doesn't have to be a US based company and the debt can be in a foreign market.
Do you know of any recently-issued convertible preferreds or convertible bonds for crude tanker companies that are public? I'm trying to realize a strike for the convertible that lets us expose to upside if crude tanker rates continue to improve, and to get paid something while waiting....