Stocks & Commodities V. 27:11 (53): Explore Your Options by Tom Gentile

Stocks & Commodities V. 27:11 (53): Explore Your Options by Tom Gentile
Item# \V27\C11\216EYO.PDF
$2.95
Availability: In Stock

Product Description

Explore Your Options by Tom Gentile

SHORT STOCK RISK IN CALL CALENDAR

Sears Holding (Shld) was brought to my attention after Barronís profiled the shares as being overvalued. Looking at the premiums, I noticed a distinct skew between the calls and puts. On the surface, the pricing makes the call calendar appear artificially cheap versus its put counterpart. Iím skeptical, but Iím having problems figuring out if some other factor is at work. Can you help?

Great question and a hat tip for seeing potential trouble rather than establishing a position that could be riskier than it appears. I checked the option premiums in Shld and whatís being priced into the attractive-looking call calendar is a potential hard-to-borrow or threshold situation in the underlying shares.

When a security becomes threatened or is in the midst of being difficult or impossible to short due to existing and heavy short interest, call prices will have a strong tendency to trade at a theoretical discount to the same strike put.




FOR THOSE ORDERING ARTICLES SEPARATELY:
*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at store.traders.com users can view the S&C Digital Edition in the subscriber's section on Traders.com.




Take Control of Your Trading.
Professional Traders' Starter Kit
All these items shown below only $299.99!
  • 5-year subscription to Technical Analysis of STOCKS & COMMODITIES, The Traders' magazine. (Shipping outside the US is extra. Washington state addresses require sales tax based on your locale.)
  • 5 year access to S&C Archive
  • 5 year access to S&C Digital Edition
  • 5-year subscription to Traders.com Advantage.
  • 5-year subscription to Working Money.
  • Free book selection.
  • Click Here to Order