what is going on with PEI (pennsylvania real estate investment trust)??? .40 cents for calls that are 5$ (62% upside for the seller) OTM and expire in 6 months... approx $8 stock... 10% annualized (not including dividends) for calls that are that far OTM???? i don't get it... any thoughts???
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PEI ---- april calls...
- Thread starter love2puck14
- Start date
hah! first post... sweet
implied vol in the name is quite elevated, there may be some impending news coming out-- earnings up in a week or two, but I don't see why vol higher that far out...
My play? Sell a time spread:
Buy Nov 8 Calls for .60
Sell Apr 8 Calls for 1.60
Credit a buck, want it to break 7 in a month.
Will def look at over the wknd
implied vol in the name is quite elevated, there may be some impending news coming out-- earnings up in a week or two, but I don't see why vol higher that far out...
My play? Sell a time spread:
Buy Nov 8 Calls for .60
Sell Apr 8 Calls for 1.60
Credit a buck, want it to break 7 in a month.
Will def look at over the wknd
Quote from steveplace:
hah! first post... sweet
implied vol in the name is quite elevated, there may be some impending news coming out-- earnings up in a week or two, but I don't see why vol higher that far out...
My play? Sell a time spread:
Buy Nov 8 Calls for .60
Sell Apr 8 Calls for 1.60
Credit a buck, want it to break 7 in a month.
Will def look at over the wknd
i know their story well... they need to re-finance a big loan by next march... but it just seems to me like a HUGE price to pay for a 62% OTM 6 month call...
my thought is that people must be speculating on them refi'ing ...
Do some reading about how volatility effects option prices. When the implied volatility of a stock is around .75 then 6 month calls that are $5 out of money will be at that price.Quote from love2puck14:
what is going on with PEI (pennsylvania real estate investment trust)??? .40 cents for calls that are 5$ (62% upside for the seller) OTM and expire in 6 months... approx $8 stock... 10% annualized (not including dividends) for calls that are that far OTM???? i don't get it... any thoughts???
Imp vol is quite elevated? It was double these levels 6 months ago and triple late last year. It's actually in the low end of its year range.Quote from steveplace:
implied vol in the name is quite elevated, there may be some impending news coming out-- earnings up in a week or two, but I don't see why vol higher that far out...
I misspoke, I was not referring to IV in general, but how April IV much higher relative to other months.
Quote from TheoHornsby:
Do some reading about how volatility effects option prices. When the implied volatility of a stock is around .75 then 6 month calls that are $5 out of money will be at that price.
ok... i've looked for other examples and havent really found anything that looked like this...