I still can't imagine why anyone would buy IBM puts to hedge INTC.
I could have understood buying IBM puts on the day before IBM's announcement or even on the day on the basis that one should sell on good news or if one expected IBM to have below expectaion's announcement. In fact, I am quite certain thousands of investors did buy IBM puts for just those reasons. But, to buy IBM puts to hedge INTC? Just doesn't make sense to me.
No doubt that the trade was a good one as several members have gleefully announced. I'd glee too if I were in their position. But, as I said earlier, timing is everythiig with buying options--even Leaps. If those who were going to hedge INTC did so with IBM leaps in early Jan, then I am not sure that those Leaps have increased value (I don't know where IBM was in early Jan before its run-up to 168-170). If they hedged with INTC Leaps puts, then they are probably more sad than I am with the covered call positions.
As for now, IBM looks sick and I'd wouldn't be surprised to see a test of recent lows (mid 140s). As for INTC, right now, I am sorry that I hedged at all. But, given INTC Mar 170 calls should open tomorrow, I can probably roll from the Feb 160s to the Mar 170s at 0 debit. But, I am uncomfortable doing a calander roll due to my perception that a double top may be forming and there is always the Feb 4th Fed meeting. So, I may sit tight and see. I can always roll.
Have a good evening. |
