Option Strategy

[jdib]

Hello,

I'm curious to know thoughts.

So FOMX Apr 21 10 Calls - there's someone bidding these up now for the past week and he's paying a ridiculous premium for them. I believe he/she has probably bought almost all the open interest for this.

The premium is really high compared to other stocks with higher volatility so I really just can't figure out what they're trying to accomplish? When he drops his bid (occasionally) the market bid goes back to like .50c.

Any thoughts on the possible scenarios?

 

[xandman]

He may be hedging a big short position. Did he buy after the call volatilty crashed?

 

[jdib]

He started buying them on or about March 9 and has been consistently buying since.

 

[xandman]

Probably some crazy doubling down. I can't see why anyone would want to own most of the OI in one contract. A professional would be more dynamic/paranoid.

 

[jdib]

Me neither.

Thanks for trying.

 

[tommcginnis]

Strikes are $2.50 apart -- that would explain about 100% of it.

If you needed more "hey--this is expected behavior..." there's always the turn it made from downhill into $9.13 or so, upwards to current price. When did that occur? March 9.

Mr Market has also bought May and June $20s. Would make a helluva calendar. Mebbe.

 

[jdib]

Wow, didn't even see those May purchases - nuts.

 

[Robert Morse]

Interesting. From LVX.

 

[jdib]

Robert, in all honesty I don't know how to properly read that chart. Can you explain?

 

[xandman]

Strikes are $2.50 apart -- that would explain about 100% of it.

If you needed more "hey--this is expected behavior..." there's always the turn it made from downhill into $9.13 or so, upwards to current price. When did that occur? March 9.

Mr Market has also bought May and June $20s. Would make a helluva calendar. Mebbe.

I thought it was all 10 calls? How did you identify other purchases?