Abt May 50 Call

Discussion in 'Options' started by karsat, May 4, 2005.

  1. karsat


    Why is this option so Cheap ABT MAY 50 CALL at 0.50,
    when the stock is trading at 49.70???
    does that mean the stock never goes beyond 50?
    why sometime options are so cheap? does that mean
    the people sentiment towards it is so bad? or its
    a miracle for the stock to go beyond 50?
    any other reasons???? let me know
  2. Yes it does trade slightly below its theoretical value ($0.69). But look at IV (19.9%) its way below normal (30%). Combined with relatively high delta (0.46) and good vega it its a good option to buy. I will buy it my self. Thanks for the tip.

    P.S. ABT did trade above $50 in 2002.
  3. MTE


    Hmm, the IV is definitely off, something's up. I'm sure there's a reason for this though, we just can't see it yet.
  4. There is a dividend coming up...
  5. MTE


    No that's not it, the ex-dividend date was Apr 13.
  6. Its a good trade anyhow. IV will not be that low for long!
  7. oops... looked at the wrong column. apologies...
  8. qazmax


    If you liked them at .50, you must LOVE them at .35....

  9. MTE


  10. ABT is big pharma, like JNJ and MRK. The IV for all of them is usually pretty low. You may have better luck with MRK options, which I've found have pretty low IV even after major moves.
    #10     May 9, 2005