I have (40) OCT08 $55 PUTS & a short of -2000 around $46.20.
It has been a frustrating short. I am $-25K on the puts and about $2K on the short.
According to a lot of blogs, LEH has write-down a fraction of what their sub-prime.
List to this U-tube video on LEH by "Mr. Mortgage":
Here's a tally of bank write-downs so far (on the Mrvl board):
http://investorshub.advfn.com/boards/read_msg.asp?message_id=28839555 Pinning the options.....
The above poster also put forward the proposition that the stock spiked up option's expiration week on the last day, so the MMs could pin options that week so they would expire worthless. They might be going for the $50s in May?
This stock could get popped to $50 (was momentarily at $48), but I can't see it moving higher. Hopefully, it will roll down to $39 short term?
This is what he said about Citibank and pinning the options on expiration week. We might be seeing the same scenario on LEH?
"I put a link to Citi's options. Looking at all that I ran across, that was the strike to burn max pain, and there were a lot of them considering that the whole market struggled below 12,700 and was nervous about the bottom dropping out any day. A few reports could have a pop in earnings, probably had calls go up in smoke as well. How many options? Mega bucks. The SPX and Nasdaq probably didn't need as much buying to pin, thus they didn't break out like the DOW. Citi gapped big time, and ticked down to $25.11. Max pain. The short covering was used to aid the pop to where they needed it.
I'm not saying Charter is wrong. I just feel that this will come back down. The DOW THEORY numbers were about 100 pts south. That's a big buy signal and might induce some buying early Monday, but I've doubts that it'll hold. If it does...probably not for long. I think that those LEH puts will prosper. All the big financials should have suffered. They reported ½ at best and pushed some creativity to do that. Others matched the yoy with a loss and all are cutting heads. They are on thin ice, indeed. Not good. AT&T reports here at the front of the week and Friday said they are cutting heads as well. Prep for CC? Stores are coming with discount cards if you bring them the rebate check. They are offering discounts. 10%. $30 for $300 rebate. $60 = $600 check. Some are even grocery stores! Stimulate the economy because now you can eat? What that tells me is they want the business, to hell with the margin on next 10K.
plash,
There were calls at $25 that were 11¢ in the money. There were more puts that $25.01 expired worthless that were bought probably pretty cheap when the DOW ran over 12,700. This was more widespread than just Citi. By pinning the strike price they expire the most options for the max pain to option buyers, calls and puts. If there were many more puts than calls at a particular strike, the next strike's puts might be a more profitable 'pin' point. Just in looking at Citi, the calls had to be bought to fill the option for 11¢, puts were keepers. The bank investment brotherhood might even have used the FED's daily window to pump C to where they made the most and paid Ben back. A short squeeze would have lessened the cost of them doing this as they had a lot of help bringing that up. It wouldn't surprise me that the shares that the shorts were buying to cover were new short sales from 'the boys' and a lack of follow through shows up as soon as op ex is gone; Monday. That DOW theory indicator of a close above 12745 was a big buy signal. Will it follow thru?"
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