Craig: I imagine now shares of ZITL are more readily available for shorting. The last couple days have been down for ZITL, so that is supposed to mean that more stock holders have been selling than have been buying. And stockholders sell to the MM's. However, at this point there has been a 15% erosion in the premium value since I bought them (and that is at the ask, not bid. To dump the puts, I will get the bid, which is of course even less). So there is no premium to bank yet. I don't know when the premium erosion came about; probably yesterday or day before. Since several times my puts have been "out of the money", I haven't been able to keep good track of the premium erosion. Today the stock touched my put strike price, so I was able to get a read on premium erosion (I bought when the share price was very close to the put strike price).
That all being said, there are advantages to owning puts vs. shorting. Number one, I don't have to worry about the stock getting called back. I don't know how common that is, but I know it happens occasionally, and I see ZITL (thin float, high demand) as a likely candidate for short shares getting called back because the MM "needs them to sell to someone". And if the short shares did get called back, it would likely be at a higher price than when I would have sold them (demand going up). ZITL is like a bucking bronco, IMO. You have to be willing to ride up and down, and stick on there.
Dwight |
