Silicon Investor (SI) -- The First Internet Community

STOCKTALK

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 : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: ahhaha who wrote (8731)	12/12/2006 2:26:49 PM
From: CapitalistHogg™	Read Replies (1) \| Respond to of 24758

If I was totally convinced it would work...Hmmmm First off a IV/HV metric I developed pointed NFLD out as an binary event driven play. The event is NFLD's lead product candidate PolyHeme, a blood substitute, in phase III trials. Currently we are waiting for Top Line results that are due any day. From there I noticed the difference in the put/call Volatility skew that showed the arb. Assuming TL results come out before Jan. expiry I would probably wager 40-50k. But I've never done this (arbitrage) before and I'm positive I must be overlooking something! One thing I figured was, let's say the stock trades to $14.80 on the DEC expiration. The arb guy is short the stock and short the $15 puts and long the $15 calls, the $15 calls expire worthless but the guy who owns the $15 DEC puts decides not to exercise them. So come Monday, the arb guy is still going to be short the stock, and has no upside protection as his DEC 15 calls expired. Meanwhile, NFLD decides to announce blockbuster results Monday morning... the arb guy is now screwed. But this is December where it is a real possibility. January is a completely different animal.