Scott, I wouldn't think that you would have any trouble closing out a position of Dec calls near expiration, as long as the stock is above the strike price. In the last week before exp. options have basically lost all of their time value and an option in the money will trade at 1/16 to 1/2 below it's intrinsic value (stock price - strike price). So, if you wanted to take a large position in a particular security that was trading at 19 and the 12 1/2 calls were 6 1/4, why not buy up as many contacts as possible and get the stock for 18 3/4 instead of 19? I believe that most options near exp. are bought and exercised by market makers looking to increase their spread on a stock they were buying anyways. DISCLAIMER: The previous blurb was surmised solely through the use of my often suspect powers of deduction, so please get a second opinion. Maybe Skipard has some knowledge of this. Anyways, I agree with Wayne that the Dec 12 1/2 are a better play than the 15's at this point. RADAF will have to hit 20 for the 15's to start outpacing the 12 1/2's. If you buy at 3 3/4, the stock will have to trade in the high 16's for you to break even (assuming your holding till earnings), but if it hits 20 before Dec 20 you could see a nice little 100% gain. Good Luck,
Jay |
