The Nasdaq?s behavior last night was as we were told to expect 2000, volatile. The rapid oscillations, whether in engineering or financial systems, is not a sustainable state. Steady state will return as the oscillations shakes out the weak bulls. Folks with gains to protect (plans for the gains thus made) make weak bulls.
On the issue of lot size, I think the institutions (newly formed I-net/IT funds) had driven up 9984 price. The Japanese investors invested in the funds. The lot size is therefore not an impediment to 9984 participation by individuals, especially given that many Japanese have more cash than most folks around the world, the scarcity of I-net shares in Japan, and finally the 40% non-float in Son?s hand. The lot size does, however, make the stock hard to trade (as opposed to simply buy or sell) given the ?stickiness? I noted yesterday. I will not try that again today, as I may not be able to get back in.
I sold my 50% MSFT. I got a bunch of VSIO June put options hanging out there with strike prices 45 and 35. I do not expect to be put any of the 35s. Should MSFT close the deal with Visio in January, my June options will automatically terminate and the time premium will evaporate on the original buyers.
Say MSFT (currently at 110) price is at US$ 90 at time of deal closure, Visio price would be at 0.45 x $90, or US$ 40.5, and I will be forced to buy Visio at US$ 45, resulting in an immediate paper loss of $4.5/share. My Visio will then be exchanged into MSFT shares at 0.45 MSFT for each VSIO. As I sold the Put options at US$ 6.625 to 7/share equivalent, I would still be ahead by $2.5/share. Of course, if MSFT is at or above US$ 100, I will not be putted the VSIO shares and will simply pocket the original premium of US$ 7/share for the June 45, and US$ 3.8/shr for the June Put 35 sold earlier (when Visio was at US$34/shr). If I end up with the MSFT shares via put/exchange, I will have simply gotten back my MSFT 50% sell off at $111 (in above example, equivalent to selling at 111, buying back at 90). If I do not get putted, I will be, net net, 50% less in MSFT (which than allows me to sell MSFT puts until I get putted).
On SAP, I am always a ready seller of SAP put options when the share is at $35 or below. Some times I get putted, some times not. The stock?s B2B story is good, its shares volatile, and its option price rich.
I do have an insurance company client and I understand the business enough to understand that I am, in fact, using part of my capital to insure others as I sell puts. Insurance business, over all, is a money-making business, especially during times of high market uncertainty and tension, as the risk premium rises. I only sel puts on shares I am willing to buy and hold.
At this point I have hanging out there, along side VSIO puts, CHL puts, ETrade puts, RTRSY puts, MO puts, NEM puts/calls, AMGN calls, and Yhoo calls. |
