Abt May 50 Call

K

karsat

Why is this option so Cheap ABT MAY 50 CALL at 0.50,
when the stock is trading at 49.70???
does that mean the stock never goes beyond 50?
why sometime options are so cheap? does that mean
the people sentiment towards it is so bad? or its
a miracle for the stock to go beyond 50?
any other reasons???? let me know
 
Yes it does trade slightly below its theoretical value ($0.69). But look at IV (19.9%) its way below normal (30%). Combined with relatively high delta (0.46) and good vega it its a good option to buy. I will buy it my self. Thanks for the tip.

P.S. ABT did trade above $50 in 2002.
 
Hmm, the IV is definitely off, something's up. I'm sure there's a reason for this though, we just can't see it yet.
 
ABT is big pharma, like JNJ and MRK. The IV for all of them is usually pretty low. You may have better luck with MRK options, which I've found have pretty low IV even after major moves.
 
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