Uptick rule and/or shortsell restrictions. How will this affect the premiums?
Uptick rule, how will it affect premiums?
- Thread starter KINGOFSHORTS
- Start date
If you are asking a <i>serious</i> question, it's possible it will have the effect of raising option prices and thus, implied volatility.
To the extent that anyone buys puts when stock is difficult to sell short, you may see put prices increase.
Although it can be argued that the would-be short seller could sell calls instead of buying puts, that's less likely because the potential profit when selling a call is very limited.
Mark
No joking around this time. 
I figure call premiums might drop due to less buying of calls as a hedge.
I figure call premiums might drop due to less buying of calls as a hedge.
Quote from KINGOFSHORTS:
No joking around this time.
I figure call premiums might drop due to less buying of calls as a hedge.
If the plan is to buy calls and short stock - and especially when the stock is difficult to sell - why not buy puts? It's the equivalent transaction, completed in a single transaction.
Too many of those options traders will be too unsophisticated to recognize that they may be paying too much for the puts. Why? Because getting a short position is probably the momentary priority, and a good price may be secondary.
But, it's anybody's guess.
Mark
Mark
Looks like the uptick rule is something that the SEC wants to implement, I would not be surprised if shortselling is restricted afterwards.