I have compiled my video on the Blackstone IPO. I went to a local prop firm and filmed this. These are two traders traded it the first few days and are now kicking back and having some fun. <embed src="http://www.liveleak.com/player.swf" width="450" height="370" type="application/x-shockwave-flash" pluginspage="http://www.macromedia.com/go/getflashplayer" flashvars="autostart=false&token=29c_1183028939" scale="showall" name="index"></embed>
Well, what I was asking is to give me a more/less realistic scenario of how to make profit from selling covered calls. Instead you are talking about grenades and making video clip... This is ridiculous. Please explain this concept of selling calls with some numbers. Thanks!
I took IBKR long today. AH story here. I have not looked at the posting on IB's website that is mentioned. Interactive Brokers hit by options trading scheme Broker alleges manipulation of Altana shares; market losses may near $1 bln By Alistair Barr, MarketWatch Last Update: 4:47 PM ET Jul 6, 2007 SAN FRANCISCO (MarketWatch) -- A scheme to manipulate the shares and options of German chemical maker Altana AG may have triggered a short squeeze that cost market makers and traders almost $1 billion in May, Interactive Brokers Group Inc. Chief Executive Thomas Peterffy said late Thursday. Interactive Brokers, an electronic broker that went public in May in one of the biggest IPOs this year, said it lost roughly $37 million from the scheme. Peterffy, who still owns about 85% of the company, paid $37 million to Interactive to cover the losses, it added. Interactive Brokers shares dropped more than 10% during Friday trading, touching a record low of $24.25. The stock has lost roughly 20% of its value since the IPO. Peterffy's unusual move is the latest in an unorthodox career he's spent challenging the brokerage industry status quo by developing and advocating wider use of electronic trading. Betsy Miller, an analyst at Sandler O'Neill, called the $37 million payment "a rare development," though not totally altruistic. "This essentially removes the downside to the minority investors," she wrote in a note to clients on Friday. "As a practical matter, since Mr. Peterffy owns approximately 85% of Interactive Brokers, he would have been exposed to nearly as much of the loss if he had not purchased the claims." If the one-time loss doesn't hurt Interactive Brokers' business in the future, public investors will likely be hit with $5.6 million of the cost, the analyst estimated. Still, Interactive Brokers shares closed down 7.9% to $24.97 on Friday. "Investors were frustrated by the clarity of the disclosures," Miller wrote. "We hope that in the future, management makes a stronger effort to communicate complex issues." Altana 'manipulation' The $37 million loss relates to unusual trading in shares of Altana (XE:760080: news, chart, profile) , Interactive Brokers explained in a filing with the Securities and Exchange Commission. On May 3, Altana declared a special 33 euro dividend, equal to almost three-quarters of the company's value. When the stock closed, traders colluded to force it roughly 25% below its regular trading price from earlier that day, excluding the new dividend, Interactive said. That closing price skewed the value of Altana options on Eurex, the German derivatives exchange, leaving the market-making options positions of Interactive Brokers and others mis-priced on May 4, the company added. The scheme, which involved selling 31 million shares of Altana at the close on May 3, triggered a short squeeze among market makers holding certain options positions. These brokers had to deliver a huge amount of Altana stock to cover their positions, forcing the shares up more than 80% in the days following the dividend announcement, Peterffy explained in a letter to Eurex, a copy of which was posted on Interactive's Web site. Market makers and others affected by the scheme probably ended up with combined losses of 500 million euros ($680 million) to 700 million euros ($950 million), he estimated in the letter. The Bafin, a Germany financial regulator, has launched an official investigation into the scheme, Peterffy also noted. In line Edward Ditmire, an analyst at Fox-Pitt, Kelton, said the decline in the shares was "unwarranted," noting that Interactive Brokers also released an estimate of second-quarter results that was in-line with Wall Street expectations. "Interactive Brokers has been the victim of an unusual and highly manipulative scheme, and this is not indicative of ordinary business risk," the analyst wrote in a note to clients. "We will have to wait for full release of second-quarter earnings to better understand the underlying trends which produced the otherwise in-line quarter, but we expect minimal impact to our estimates," he added. Alistair Barr is a reporter for MarketWatch in San Francisco.
First of all start with the price is really paid (remember : TOM134 THEN: Bought 3,300 shares on 5/7/07 at $27.03.) 2° DONT buy back the option at higher price!? WHY_?, is not necessary! Just LET exercise it (after then buy back the shares at few ten cents lower than the ACTUAL price, let's move lower the price a little bit before acting) 3° DONT sell the calls at the actual price, wait for a little or nice move higher, get more before acting 4° Manage the position 5° Check with google and learn, May be You get the point and the figure in one time, that's the big deal, earn extra cash EACH month into your account! (if You dont belive me, Google will provide You more than 8.000.000 pages saying that) 6° Find waves, sell the call into "v" high, buy back onto "v" low, wait a little before acting, to get more 7° Manage your strategy, check also yours skills regarding your "trading Level" autorisations Trading is not a game. see INTO "Compound Stock Earnings" ws: --> #Writing covered calls involves selling call options against your stock holdings. By doing so, investors can gain consistent monthly income from their stock portfolios without selling the stocks and regardless of market direction. The covered call technique has nothing do with the risky practice of speculating or trading the markets with options - in fact, it is the complete opposite . Covered call sellers earn income from selling option contracts to speculators and traders! #, <-- source : http://www.compoundstockearnings.com/what-are-covered-calls.htm Copy that on Level Five ? If not try again reference : 8500.000 pages! http://www.google.com/search?sourceid=gmail&q=writing covered calls Gamblers lose money. OPTIONS WRITERS are the WINNERS
Ok. If I do not buy back options then my account will be in red not 15% but 10% (see my calculations). Here is my question again: how do you MAKE money by selling covered calls without loosing capital? Regarding your suggestion about waiting for "v" high and "v" low, "waves", management, skills ... "trading Level" autorisations, . The only one question comes to mind: "What the hell he is talking about?" Please do not post more references from web, but use your head. Thanks.
first time i hear such a huge dividend is issued: how on earth can a company afford to give away the equivalent of 75% of its total mkt cap in one go? and given the stock exchange responsability to maintain an orderly mkt and prevent excess volatility, how come the potentially disruptive surprise announcement of a disproportionate dividend payout was allowed to be made?
Thanks for the link. I believe we do it the way Peterffy suggests here already, a simply unambiguous, deduction of the large dividend from the strike. In fact, the added 'adjustment' based on the closing price makes no sense at all, and invites manipulation. Its a minefield out there.