What do you think about ETFC?

Discussion in 'ETFs' started by brown, Jan 5, 2008.

  1. brown

    brown

    What do you think about buying a call option for ETFC? They are down to 3.24 now, Im thinking about going in as it is so cheap to get a call it wouldnt even be a loss if I did end up going down. What do you guys think?
     
  2. I put them on my watch list when this subject first got posted, the options were .50 and .90 for 4.00 and 5.00 April calls, they are half price now.
     
  3. The stock is already a call.
     
  4. If you're bullish, buy the zero strike call (trade the stock).
     
  5. bt116

    bt116

    Seems in this case the option provide very little risk reduction in terms of price. no one really has any idea when etrade will bounce back (if it wll bounce back). but @ less than $4, you have very little downside, and $0 theta risk. if you want to go long, the stock is the play.
     
  6. i like chris' idea, buy the 2010 $5 call at $1.2. Basically if etfc doesnt go bankrupt, it should bounce back. If it does go bankrupt, you lost 1.2 instead of 3.2 (underlying price)
     
  7. If it does go bankrupt, you lose your entire investment instead of your entire investment. And if it doubles, you make 17% instead of doubling your money.

    So just how high do you expect this turkey to fly?

    Spin has it right. Buy the $0 call. There isn't even any time premium in it.
     
  8. i dont understand, i can buy 100 share for $320 or 1 contract of 2010 5 call for $120. If it goes bankrupt, i lose $120 instead of $320?

    The doubling is true but only if it doubles by expiration at 2010 jan. Also you would only lock $120 instead of $320 for 2 years, leaving you with $200 extra to invest in others.
     
  9. marketfly

    marketfly

    Hey jack ass, with that logic what if it gets bought for $10??? The calls would go up 400+% and you would only be risking a third of capital.
     
  10. With Citadel in at 2.5B, I can't see BK happening, especially with all the institutions positions. I say it's a shakedown for the long. A market correction, they are still very strong. I can see ETFC hitting 7-8 . Possibly 10 or better for the long...

    any thoughts?
     
    #10     Jan 7, 2008