another gem from cramer:
Go behind the scenes with me to the Sears Holdings (SHLD:Nasdaq - commentary - research - Cramer's Take) September $125 calls and puts. As I write, the calls are about 60 cents and the puts are about 70 cents, with the stock at $124.70. All week I have watched these two contracts. When the stock was in the mid-$120s, I saw intense selling of the $125 calls for three-four bucks. It was relentless selling, and I believe a lot of it was short and some of it was just plain selling to close.
But as the stock kept getting hammered, I saw the puts pump. When the stock got to $126, guys were trying to buy puts for a buck and change. Then sellers materialized there, too.
Now, with the stock at $125, I see guys selling puts and calls like mad. You know what they are hoping for? If they can keep selling puts and calls, they eventually can pin the stock at $125 where both will go out worthless.
Most of the actual owners of Sears calls and puts are small-timers. They don't want to take the common in or be short the common. If the stock closes at $125, give or take, 10 cents, I bet both put and call holders will let them go out worthless, so the short-call-put trade is likely to have less risk than you realize. So if you have a lot of capital, you can keep banging both sides of the trade -- puts and calls -- to get it to close at $125.
Remember, at a certain point, if the puts get too cheap and the stock seems like it will stabilize, traders will come in and buy common and the put and then sell the call, which, when the stock looks like it will stabilize, might pump a bit.
No matter; this stock, barring a catastrophe, will be going out at $125 and everyone short puts and calls will make out like a bandit.
