Why would anyone write options on PG?

Discussion in 'Options' started by noob_trad3r, May 11, 2010.

  1. IV sucks and SPY is diversified and has a higher IV.

    With PG you have risk of one stock VS 500, and better compensation on the SPY options, including better liquidity.
  2. MTE


    Well, I guess the market thinks that a stock such as PG carries less risk than SPY.

    Interesting, yes...mispriced, probably not.
  3. ?....PG had been quite range-bound, a premium-sellers delight, until Thursday. It has the bad luck of being one of the most-mentioned stocks from last week's meltdown. It would have been more "just" if GS or BP had tanked instead. :cool:
  4. I still do not get the low IV's PG could go out of buisness, SPY is 500 stocks so no single equity risk.

    PG could get sued, or some new CEO comes in ala TYCO style and do all kinds of bad stuff to take the company down etc..

    but SPY represents 500 companies so PG is 1/500th of the risk there.
  5. you do realize that if no one is willing to write options on pg then no one could buy options on pg?
  6. MTE


    PG is not the only stock with options trading @ lower IV than SPY. There is also PEP, KO, MCD and etc.

    Financials are a big part of S&P 500 hence the market perceives them as higher risk.
  7. PG bèta: .54

    Higher premiums are demanded for the SPY, which by definition has a bèta of 1.
  8. PG is an "institutional darling" along with many other consumer goods stocks. :cool:
  9. Premium


    Selling premium on boring WMT has been the most consistent income for me for over a decade.
  10. rew


    PG is much less risky than the average stock in SPY so why shouldn't it have lower IV? Heck, PG is less likely to go bankrupt than the U.S. government.
    #10     May 12, 2010