Interesting posts Walkingshadow:
I have made and lost considerable sums of money playing the options "game". I probably would have made more money if I stayed out of options, but I also consider it to be the cost of "tuition" on the road of experience. Recently I got nailed selling cc's on the June 62.5 RMBS. The stock was out of the money until the very last day of options expiration when they announced the Toshiba (or was it Hitachi)agreement to pay royalties, causing the stock to shoot up 26 some odd points casing me to lose the stock and a considerable amount of profit. I recently sold the cc ofr the July 200 on brcm thinking that after they made the announcement of being included on the S&P 500 and making the 20 some odd point advance (to the upper 160's level)that I would have enough room to sell the cc for july 200 and have some breathing space. Now that brcm has closed at the 218 level on friday, there are several thoughts that I have and wish the thread to offer their comments. One of the things that I learned was that some funds cannot buy into a stock that is placed on the s&p 500 unntil they are officially included in the group, which did not take place until last friday. According to the various news sources, because of the valuation of brcm, the funds would have to buy 3.3-3.5 billion dollars worth of stock, bringing that to a total of 17.5 million shares. It seems that 92 million shares were traded that day alone. Would you say that this is an overbought situation making brcm a good stock to short, short term. It also seem that the maximum open interest for July is at the 200 level. It would be reasonable to assume that there can be a pullback to this level by options expiration since most of the shares that were required to be purchased have already been purchased, therefore the upward pressure on the stock has already reached it's peak. On the other hand you may find that index funds have spent a fortune buying brcm at the 205-218 level and would do what they can to minimize their losses, even if it is short term. As far as my position is concerned, I can always roll the July 200 calls to the August 220 calls for even money, and repeat the process as often as required. This same scenario occured with me from November to march, whee I would roll the calls to prevent being taken out.
Opinions about short term valuation of brcm would be appreciated.
Thanks to all,
David |
