For an option with 4 years to run This price 7 Stock at 9 Not a high flyer buy some decent potential for volatility.
Not enough info. Put or Call? PEG? Debt? Secondaries? Sector? Ownership? Short interest? Which indexes hold it? I mean come on Soes.... is this a bait question? I assume you're intelligent enough to craft a slightly more informational post if you want a real answer.
what's the implied vol? any dividends? I'm 1.10 bid at 1.85 stupid wide... I know... but I'm missing essential components...
I said 'this price', meant STRIKE price. I'm sure you're not bidding 1.10 for a $2 intrinsic. As for the IV, who the hell knows. If I knew that I'd know the price. Just figure a stock with some potential for a move, and 4 years to do it.
Well there you go.. you could've stated it was an ITM call and not the OTM put... You know... essential components? So that would be 3.10@3.85 then... + interest component. Which would be... 50 cents? That also depends on what country and what currency it's traded in. But now we're looking more at possible dividends and also short stock rates...
You're right, but its actually a warrant I have in mind so I neglected to mention CALL. Even I make mistakes once in a long while. That's not a bad guess. If they offered the CALL to you at say, 20-30 cents over intrinsic, how many would you buy ?
This thing doesn't actually pay a div, but I wonder if because of the long timeframe , they market isn't pricing in the POSSIBILITY of one. Otherwise "it" seems a bit cheap on the face of it.
Uhm... so intrinsic would be 2 plus about 50 cents in interest.. so thats 2.50 intrinsic value. What's the offer in that warrant? If they assume a future dividend than those calls would be priced with a discount, especially when it's European style. I don't know much about warrants, but I guess it would be European... so you can't exercise before expiry date. Also, if it's a hard to borrow stock.. that would mean all derivatives are priced lower as well... since you're not able to buy the call and sell stock in a hedged position... or maybe you can sell it but it will incur high short stock fees... So these to will both mean that that call would trade a bit lower than normally expected. Can definitely add up. Might even trade below intrinsic value... below spot-strike, if it's European style.
Also... I kinda used an implied vol of 40 I think... don't know what kinda stock it is.... is it a large cap? what sector is it in? It would be easier if you would just tell me what it is... but I get it if you want to keep a possible cherry for yourself In my experience though... there's usually something else at play. If it looks cheap, it's usually for a reason. That said, warrants can be very interesting since it might not be trading as frequently.... even the issuer sometimes is sleeping on the job and they might have an issue with their modelling...
I understand your points, not sure any apply to this strange pricing. Might just be a dog. Right now priced, thinly traded, at only 15 cents or so over intrinsic. 4 years to run. Damn