SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Value Investing
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: rllee who wrote (42008)3/28/2011 3:56:00 PM
From: E_K_S  Read Replies (3) of 78670
 
Hi rllee:

Re: Gulf Resources, Inc. (GFRE)

I like the low valuation, the extremely low PE, excellent future earnings but still will not invest because of the Chinese exposure. The option market agrees.

The May $5.00 calls theoretical value s/b $1.94 but is bid $1.00 Ask $1.40 a 28% discount at the ask and a 41% discount from the last trade at $1.15.

I thought it might be a trade to buy the stock and sell an in the money covered call but not at such a huge discount. You would have to sell them at the bid ($1.00) which is a 52% discount from the theoretical value.

On the flip side, the market is buying over 289 contracts of the May $5.00 Puts. Theoretical value s/b $0.32/contract but at $0.50/contract at the bid and $0.65/contract at the ask is a 36% premium (bid) & 51% premium (ask) and on heavy volume 2x OI.

Market thinks this stock is headed lower.

Possible trade: Buy the stock and sell the May $2.50 Call for $3.00. Expect to buy the Calls back for $2.00 or less in 60 days.

EKS
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News