What are the implications of this option chain?

Discussion in 'Options' started by jimmyjazz, Jun 10, 2014.

  1. donnap

    donnap

    Try translating that into a $50 strike for a 77.50 stock. The calls are very ITM and the puts are very OTM.

    The .05 bid on the Oct. put seems a bit of an anomoly. Perhaps a small retail order.

    Otherwise, these very ITM and OTM options are illiquid and FV falls somewhere in the wide B/As.

    It looks like a takeover chain, but perhaps it's just the low price. No divs, I assume.
     
    #11     Jun 10, 2014
  2. Just because the options are DITM/DOTM doesn't mean there shouldn't be time premium, though. I wouldn't necessarily call those B/A spreads wide, but even if we assume FV is somewhere in the middle of each spread, there is hardly any difference between the values from front month to over a half year out.

    I get the idea that a takeover would pin the value, so maybe that's it, but wouldn't that rumor have to leak to retail in order for such a thing to happen? Color me naive!
     
    #12     Jun 10, 2014