Yrcw?

[newguy05]

anyone have some insight into this one? it was brought up in the option section, cant find much news on the web. Basically there was massive dilution to avoid bankruptcy and the stock crashed a while back.

the interesting part is the option prices. With the underlying still trading at $0.7, the oct 0.5 put is valued at $0.4, and the oct 1 put is at ~$0.8.

basically the option is priced as if the stock will goto $0 by oct, even though it seems pretty stable right now at $0.7.

what's the deal?

 

[rmorse]

Quote from newguy05:

anyone have some insight into this one? it was brought up in the option section, cant find much news on the web. Basically there was massive dilution to avoid bankruptcy and the stock crashed a while back.

the interesting part is the option prices. With the underlying still trading at $0.7, the oct 0.5 put is valued at $0.4, and the oct 1 put is at ~$0.8.

basically the option is priced as if the stock will goto $0 by oct, even though it seems pretty stable right now at $0.7.

what's the deal?

YRCW is a REG SHO stock, so no one can short it: http://www.nasdaqtrader.com/Trader.aspx?id=RegSHOThreshold

CIT traded the same way before it went bankrupt and went to zero. I don't have an opinion on YRCW.

 

[m22au]

YRCW situation is explained in these two articles:

http://seekingalpha.com/article/280...ture-looks-dim-for-yrc-worldwide-shareholders

http://seekingalpha.com/article/281...me-running-out-for-yrc-worldwide-shareholders

The shareholder vote described in the second article will take place on 16 September.

So the billions of additional shares will be available for sale on 16 September or 19 September.

 

[newguy05]

Quote from m22au:

YRCW situation is explained in these two articles:

http://seekingalpha.com/article/280...ture-looks-dim-for-yrc-worldwide-shareholders

http://seekingalpha.com/article/281...me-running-out-for-yrc-worldwide-shareholders

The shareholder vote described in the second article will take place on 16 September.

So the billions of additional shares will be available for sale on 16 September or 19 September.

i see, so the option is pricing in the fact after sept 19, the dilution will make this stock worthless.

 

[m22au]

Quote from newguy05:

i see, so the option is pricing in the fact after sept 19, the dilution will make this stock worthless.

worthless - no

suffering from massive dilution - yes

 

[stock777]

so who exactly is paying 73 cents for this today?

 

[m22au]

Quote from stock777:

so who exactly is paying 73 cents for this today?

People who don't fully understand the effect of the dilution that will take place in less than 3 weeks.

 

[rmorse]

Quote from stock777:

so who exactly is paying 73 cents for this today?

People with a REG SHO buy in.

 

[stock777]

Ans #1, ridiculous

Ans #2, poss part of the explanation, but hardly the final word.

you would have to know that some huge number of buy ins were happening to justify it on that alone.

 

[m22au]

Quote from stock777:

Ans #1, ridiculous

You may think that my explanation
"People who don't fully understand the effect of the dilution that will take place in less than 3 weeks."

is ridiculous, however if you look here:

http://messages.finance.yahoo.com/mb/yrcw

you will find a lot of people who still don't understand what will happen on 16 September, and the impact on the YRCW share price.