The warrants will have their max theoretical time premium when AIG is at 45.00
On May 21, 2013 when AIG closed at 44.96, the warrants closed at 18.50
With the warrants now in the money by almost 5.00, they are priced at less than 1.00 above their strike price value.
As the pps rises above 45.00, the warrants will gain intrinsic value but lose extrinsic value (time premium). At the current price, there is now around 14.00 of time premium in the warrants. Due to the large time premium, the Delta will be working against the warrant holder.
If you want a long term leveraged play, think about owning the Jan 2015, 30.00 calls for about the same price as the warrants. You would be paying less than 1.00 for time premium, but would be gaining close to 1 for 1 on the upside.
she is promoting the sell off so Icahn could pick up more shares at a cheaper price?
One reason for the low pricing of the warrants could be attributed to the basic principle of supply and demand. As the pps of AIG rises, there will be less demand for the warrants. Investors will not want to pay for so much time premium, especially if AIG is in a bull trend.
Compare the Sept 45 call to the Jan 2015, 45 call. If the pps of AIG were to increase by $5, the Sept 45 call would also increase by around 5.00 but the Jan 2015, 45 call would increase by only 3.45 The Delta effect would be even worse for the warrant.
At yesterday's close of 3.13, the Jan 2015, 3.00 put was 1.48
If you were to sell this put short, you would collect a premium of half the strike price!
Also, you would not have to hold this position until the Jan 2015 expiration. If the pps were to rise by just 2.00, the put could be covered for around 0.35 This would give you a profit of over 1.00
I have accounts in both Optionsfirst and Charles Schwab. I am allowed to sell naked puts and naked calls in both accounts. Optionsfirst is actually part of Scottrade. I had converted my account from Scottrade to Optionsfirst because they did not allow shorting of options, even as an option spread. The only except is covered calls.
If Scottrade still does not permit shorting of options, then you should ask them to move your account to Optionsfirst. Once you have over 25k in your account, qualification to the highest level is no problem.
I am short the Sept, Oct and Jan2014, 3.00 puts. I am long the Nov 2.00 calls.
I am thinking about adding to my long position by doing the Nov 2.50/3.50 call spread. This could be done for a debit of around 0.52 which would give me an effective pps of 3.02, which is 0.20 below the current price of 3.22
Options is one of the most effective ways to make money in a sideways trending, volatile stock such as DNDN. You need to use any advantage you can to make money in the market. Without the ability to short options, you are essentially being handicapped in your game.
This is like watching the Wildebeest migration on the National Geographic channel. Buying above 1,000 is like crossing a river full of crocodiles (or bears). Once the first few buyers have proven that it is safe, then they will all rush in.
Just bought a few puts on TSLA
Are you also short PCLN? I did some put spreads yesterday on PCLN when it broke through 1,000.
Huge volume was in the Jan 2015 puts.
Jan 2014 may be a bit early. The back to school and Xmas spending could maybe keep them afloat for awhile longer.
Deborah Weinswig of Citigroup who was on CNBC also said the liquidation value is $1.00
Wrong comparison. Take a look at the Income Statement for each company for the last 3 years. Apple is increasing at a dramatic rate. JCP is decreasing at a dramatic rate (maybe frightening would be a better word).
To make your point, a better example would be Best Buy. Their numbers look awful but for some reason they are at a yearly high.
This is a positive for JCP. However, it is going to take much more than this for them survive.
Maybe they could try offering a discount for cardholder's purchases like Target does. I bought an Apple TV at Target and received an immediate 5% discount at the register. JCP could offer a 7% discount, but only as a credit usable for a future purchase. This would be a way of ensuring that the customer will always return in order to use their credit for a future purchase.
Any shutdown would most likely be relatively brief. Gov. employees would still be getting paid even if there is a shutdown. Adjusted for inflation, the gov had lost around 74 million for each day of the previous shutdowns, due to the lost production.
The chart for NUGT looks similar to that of UVXY. Maybe better. Already 2 reverse splits for 2013. Has anyone tried to play the short side of NUGT?
"is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired securities of JCPenney between August 20, 2013 and September 26, 2013"
Ackman sold his shares after Aug 27. However, after reading this again, it appears that this class action will only involve those who had purchased the stock between those two dates. Therefore, it appears that Ackman will not be involved in this class action.