what is going on with PEI (pennsylvania real estate investment trust)??? .40 cents for calls that are 5$ (62% upside for the seller) OTM and expire in 6 months... approx $8 stock... 10% annualized (not including dividends) for calls that are that far OTM???? i don't get it... any thoughts???
hah! first post... sweet implied vol in the name is quite elevated, there may be some impending news coming out-- earnings up in a week or two, but I don't see why vol higher that far out... My play? Sell a time spread: Buy Nov 8 Calls for .60 Sell Apr 8 Calls for 1.60 Credit a buck, want it to break 7 in a month. Will def look at over the wknd
i know their story well... they need to re-finance a big loan by next march... but it just seems to me like a HUGE price to pay for a 62% OTM 6 month call... my thought is that people must be speculating on them refi'ing ...
Do some reading about how volatility effects option prices. When the implied volatility of a stock is around .75 then 6 month calls that are $5 out of money will be at that price.
Imp vol is quite elevated? It was double these levels 6 months ago and triple late last year. It's actually in the low end of its year range.
I misspoke, I was not referring to IV in general, but how April IV much higher relative to other months.
PARD is 6.87 Mar 15 call is .70 bid Not a recommendation, don't know a thing about it Just an example of what high IV does to price