Replies to post #105172 on Anavex Life Sciences Corp (AVXL)

[BAR123]

Now that is a good options question. I've been wondering the same thing

[XenaLives]

Position and relevant options charts:

13F-HR CITADEL ADVISORS LLC Long 16,293
13F-HR CITADEL ADVISORS LLC Put 12,900
13F-HR CITADEL ADVISORS LLC Call 29,700

Citadel is also a known shorter.

From 3/28 EOD


From 3/16 1056 am



From 3/13 0947 am



From 3/07 1336 pm


From 3/01 EOD


From 2/27 1438pm


From 2/17 EOD

[imho]

Can someone with option experience explain CITADEL's reasoning as to why they hold the following? They are first time filers for their long position.

13F-HR CITADEL ADVISORS LLC Long 16,293
13F-HR CITADEL ADVISORS LLC Put 12,900
13F-HR CITADEL ADVISORS LLC Call 29,700

I stayed at a Holiday Inn Express, so I think I can handle this, LOL.

Missing from the above are strike prices and expiration times, so I will make a number of assumptions. I am assuming the 12,900 put means 129 contracts and 29700 call, means 297 contracts. Note: 1 contract = 100 shares (as everyone should know).

This may be one scenario.

1) The fact that calls and puts implies a straddle strategy. Google it.

2) If they are long the straddle, they paid a premium. Assume they did.

3) They are expecting either a big move up (lose on the put & profit from the call)

4) or expecting a big move down (lose on the call & profit from the put)

Now, given they are long 16,293 shares, I am guessing a covered call in the form of 162 or 163 contracts where sold to collect a premium, which offsets the premium in step 2) above. Thus a relatively free straddle.

So I am guessing, 12,900 put shares and 12,900 call shares, forms the straddle and the remaining call shares (29,700-12,900 = 16800) is used as the covered call strategy (technically, this is short the calls, which is not what is indicated, but that is my assumption).

IMHO