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Strategies & Market Trends : Canadian Options
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To: Jan Johnstone who wrote (54)1/25/1997 5:17:00 PM
From: kajtek   of 1598
 
I play Bre-X options. Look at my posts before. I think nobody can tell you when the deal will be done. I lost some money playing out of the money calls in December and January. First the deadline of Dec 4 set by Indo was several days before December options expiration Then the end of December deadline was again several days before Jan expiration and the deal was not done. Now we have Feb 17 deadline. Too close for February expiration. If Barrick and Bre-x send the proposal to Indo before the deadline we can still wait several days for their reply and Feb expiration date will pass. Is March safe. I am not sure. Nothing will surprise me now. We can have a deal on Monday or July option may expire and the deal is not done.
What I do now? I play short time Bre-X options.
I buy puts when it trades around 24 and sell them around 22 and then buy calls and will send them around 24.On Friday I bought calls some in the money Feb 20 and some out of the money Feb 24. I sold my puts Feb 24 when Bre-X was at 22. I would gain more if I waited but I got my lessons at options. Profit is a profit.. Waiting most of the time will hurt you. Time value decreases and then you loose more.

I know that if I sell calls around 24 and then the next day the deal is done I will miss the opportunity. But Dec and Jan thought me that I made only money playing the short term ups and downs and I lost hoping for the jump. I hold till expiration day Jan and Dec 25 calls hoping that if the deal is done stock will jump above 26.

How many time we thought that the deal was close?
The bottom line is you have to decide how to play. Anybody's advice will be just a guess. NOBODY knows when the deal will be done.
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