Notice in the attached option chain how some deep out-of-money puts have much higher premiums than those with higher strike.
Can you explain why?
Can you explain why?
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Why some puts with lower strike have higher premiums than higher strike?
- Thread starter elitetradesman
- Start date
Quote from elitetradesman:
Notice in the attached option chain how some deep out-of-money puts have much higher premiums than those with higher strike.
Can you explain why?
The options your looking at come from strikes that trade with a dividend or special adjustment. After these adjustments, very few public orders come in except to close. Your looking at the last sale, not the bid/ask average, which is where most end of day and midday pricing come from. Also, if an option meets certain criteria, to save on bandwidth, a market maker is not required to post a market, so the last sale/current value, does not change even when the stock price changes.
Quote from ASE1245:
The options your looking at come from strikes that trade with a dividend or special adjustment. After these adjustments, very few public orders come in except to close. Your looking at the last sale, not the bid/ask average, which is where most end of day and midday pricing come from. Also, if an option meets certain criteria, to save on bandwidth, a market maker is not required to post a market, so the last sale/current value, does not change even when the stock price changes.
No, I'm talking about the bid and ask of puts with strike price 12 or less.
Go to www.theocc.com This is the Option Clearing Corp site. Type in BMO and you will see memos on this.
When I pull up the quote these strikes are listed as BMO1 with a description of the cash component..
When I pull up the quote these strikes are listed as BMO1 with a description of the cash component..
The 12 to 7 puts are: 4.5/5, 3.5/4, 2.6/2.95, 1.60/1.95, .70/.85, .15/.40. I don't see what your looking at. Ignore the last sale.
This option has strikes that are exercised for 100 shares, and strikes the are 100 shares plus cash. Any non regular dividend is creates an option that includes the price of the special dividend or distribution. That's why the 70 puts are 11.30/14 and the 12 puts are 4.50/5.00. On the platform I'm looking at, the stock is 57.56 and the dec 6 calls are 1.15/1.50 and include $35.29, which looks off.
I just looked it up on the OCC website and the options are for:
PRICING
The underlying price for BMO1/2BMO1 will be determined as follows:
BMO1 = .12 (BMO) + cash in lieu of .0057 fractional BMO shares
This option has strikes that are exercised for 100 shares, and strikes the are 100 shares plus cash. Any non regular dividend is creates an option that includes the price of the special dividend or distribution. That's why the 70 puts are 11.30/14 and the 12 puts are 4.50/5.00. On the platform I'm looking at, the stock is 57.56 and the dec 6 calls are 1.15/1.50 and include $35.29, which looks off.
I just looked it up on the OCC website and the options are for:
PRICING
The underlying price for BMO1/2BMO1 will be determined as follows:
BMO1 = .12 (BMO) + cash in lieu of .0057 fractional BMO shares
Attachments
Thanks, FSU and ASE1245.
It's all clear now.
It's all clear now.