IMO, you have misinterpreted the activity in the Feb 10 calls. On Friday, they were trading at approximately 120 volatility (extremely high). It was a great trade to buy 1000 shares of Manu at 10, you could sell the Feb 10's all day at 1 3/16 to 1 1/4. Option traders saw this as a way to get a possible return of $1,100 to $1,200 per $10,000 investment for a one month period. IMO, this was the reason for the activity in the Feb 10 calls. The high volatility, of course, suggests that others believe there may be a deal and public customers as yourself and other MANU threaders may be willing to pay up for the calls. Market makers view this as an opportunity to lock in the profit on an investment by selling you the calls you buy at enormous premiums. IMO, I wouldn't buy the MANU Feb 10 calls. Just by the stock and sell the Feb 10 calls against it. That won't make you rich at exponential rates, but who can argue with the rate of return offered by this particular option strategy? Effectively a 10% or greater ROI for 30 days. Annualized, well, I'm sure you can do the math.
Good luck on your investment and thank you for your post. |
