Consider an ICO strangle

Discussion in 'Options' started by eldorado1, May 2, 2011.

  1. I don't usually post my trades and very rarely use debit spreads but ICO September 14/15 strangle @ 0.20 just looks too cheap. Good luck
  2. I am not up to speed on strangle analysis. Can you explain why you believe it is too cheap.
  3. It could be tricky because the company was purchased.
    But it went up more then 3 bucks only today so I thought what the hell is 0.20 for a strangle. But, then again there's got to be a catch otherwise it's free money..
  4. newwurldmn


    You are paying for something that could be worth zero and that is considered "free money?"

    If you believe the deal will bust or another buyer will come, it's a good bet. Otherwise, unclear.
  5. OK obviously the circumstances are irregular with ICO. as I said if there was no "catch" it would be free money. Wouldn't you buy BAC September Strangle if it was traded for .20??
    I know I certenly would.
    And again, I very rarely use debit spreads but I took a chance on this one. Could possibly be a mistake. I will update if it went well after all.
  6. newwurldmn


    If a BAC September strangle was trading for 20 cents, I would ask what's the catch and definitely not think it is free money.

    More pedantic than anything else.

    Good luck with the strangle; I hope it works out for you.
  7. Seems like a reasonable risk for the potential of a decent can pick up the Jan 2012 14/15 strangle for $0.26.
  8. spindr0


    ICO received a buy out offer for $14.60 so unless someone else comes along at a higher price or the deal falls through, it's dead money.

    Look at the IV. They're pricing it as DOA
  9. Good to know...I always learn something from posts on weird situations like these.
  10. So what happens to those options when the buyout goes through? It looks like they offer out to 2013. Do the existing contracts just languish in la-la land until expiration?
    #10     May 2, 2011