>>I assume that DS is the market maker.
Umm, that'd be me. I clear through DS, although I am an independent and do not work for them. To answer your question, yes, people can't seem to wait to sell BCE premium on any rally. This seems a knee-jerk reaction, and in my opinion not a very wise course of action. Consider that the
190 lines range in implied volatility from 51 to 49, while the rest of the series average 55. Consider also the recent 90-day historical volatility for BCE of about 58 (the last two days Bell has had about $18 in range). Consider also the fact that soon BCE will spin off NT and the NT IV is about 65. Since there will then be opportunity for direct arbitrage between the two, those numbers will come together,
and I don't anticipate that NT's vol will get dragged down much. Sure, $10 seems like a lot for an April 190, but there is a full month to go, and that's a lifetime in this market. I'm not saying that covered writers won't make money with that strategy, but there are a lot of better ways to go.
Two more days and our little circus strikes its tents and heads down the 401 to Montreal. It sure is sad. About half the people on our floor will not make the move for one reason or another. Some are retiring, some don't want or can't leave their families, some are switching to other areas of the business. Our trading floor is probably the best I've ever seen, and business was the best it's ever been, so it is with mixed emotions that I head to Montreal. They say a change is a good as a rest. We'll see. Mon moyenne-vie aventure commence. (Something like that ;-) )
Happy trading.
Porter
E&OE
(Here's the doh! part: The writer of this may or may not have a position in the mentioned securities. Nothing said is to be considered specific buy or sell recommendations) |
