Why SHLD December PUTs so expensive?

R

R0bert

SHLD IV for december 90 puts significantly higher than for calls. I'm novice in options. Is it normal?

In theory IV(put)=IV(call) and I can't find any info about SHLD dividends or smth that could pump the puts up. Are they going to do some trick that considered in put's prices?
 
Quote from 50_Bip:

Fast Eddie is probably doing conversions to pump up earnings :cool:
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Who is Fast Eddie? Which one of them do you mean? How can conversions pump up earnings?
 
R0bert,

I think SHLD shares have very high short interest and are probably not available for shorting.

That probably limits arbitraging the put call disparity that you found.

Don
 
Thanks! My broker has more than 50000 SHLD available for borrowing. Nice chance to get almost riskfree $$ on selling conversions.
 
Don't you think it's too obvious for such a mispricing to remain!? I bet your broker is not the only who has shares avaible.
 
Quote from MTE:

I bet your broker is not the only who has shares avaible.
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Guess you are right, but i tried to short SHLD on other accounts and neither Penson, nor Merrill allow to short it:confused:
 
Quote from R0bert:

Thanks! My broker has more than 50000 SHLD available for borrowing. Nice chance to get almost riskfree $$ on selling conversions.
More...
If you are able to borrow the stock and sell the conversion, I would worry about your subsequently being forced to cover your short stock position.

I have never been forced to cover a short stock position, but I am under the impression that it can happen.

Maybe somebody else can comment on the likelihood of being forced to cover.

Don
 
Once (a couple months ago) i got 500 stocks or so of ARTC suddenly covered by broker (w/o any notice), that made my sold PUTs naked, but luckily the stock raised after it and I bought ITM PUT closing even greater profit than it would be possible in case of holding reverse conversion till expire date.
I bear in mind such risks when entering position, and that's why i noted almost riskfree $$:)
 
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