Yrcw?

Discussion in 'Stocks' started by newguy05, Sep 3, 2011.

  1. anyone have some insight into this one? it was brought up in the option section, cant find much news on the web. Basically there was massive dilution to avoid bankruptcy and the stock crashed a while back.

    the interesting part is the option prices. With the underlying still trading at $0.7, the oct 0.5 put is valued at $0.4, and the oct 1 put is at ~$0.8.

    basically the option is priced as if the stock will goto $0 by oct, even though it seems pretty stable right now at $0.7.

    what's the deal?
     
  2. rmorse

    rmorse ET Sponsor

    YRCW is a REG SHO stock, so no one can short it: http://www.nasdaqtrader.com/Trader.aspx?id=RegSHOThreshold

    CIT traded the same way before it went bankrupt and went to zero. I don't have an opinion on YRCW.
     
  3. m22au

    m22au

  4. i see, so the option is pricing in the fact after sept 19, the dilution will make this stock worthless.
     
  5. m22au

    m22au

    worthless - no

    suffering from massive dilution - yes
     
  6. so who exactly is paying 73 cents for this today?
     
  7. m22au

    m22au

    People who don't fully understand the effect of the dilution that will take place in less than 3 weeks.
     
  8. rmorse

    rmorse ET Sponsor

    People with a REG SHO buy in.
     
  9. Ans #1, ridiculous

    Ans #2, poss part of the explanation, but hardly the final word.

    you would have to know that some huge number of buy ins were happening to justify it on that alone.
     
  10. m22au

    m22au

    You may think that my explanation
    "People who don't fully understand the effect of the dilution that will take place in less than 3 weeks."

    is ridiculous, however if you look here:

    http://messages.finance.yahoo.com/mb/yrcw

    you will find a lot of people who still don't understand what will happen on 16 September, and the impact on the YRCW share price.
     
    #10     Sep 4, 2011