Replies to post #255645 on Zeev's Turnips Patch-No Politics (ZEEV)

[connor26]

Zeev - this is none of my business and i know you won't answer if you don't want to - but may i ask if you always buy equal dollar amounts of a stock without regard to the # of shares it buys - do you buy fewer larger positions of different stocks or more stocks with smaller positions - do you have a dollar amount goal you shoot to make each day - i'm trying to determine/develop a philosophy for myself that is realistic and obtainable - i follow the thread, read the road maps, but never got a grasp of how you actually trade (just what stocks you trade) - thanks in advance and i apologize if this is out of line
Dan

[Bruce A Thompson]

Zeev

That is good advice. I've just got to figure out a good exit stradgedy. (g)

The following is Raw Data:

Expiry is next week.

COMPX is 1990.61 close yesterday

EVEN

June 1990s are bid $19
July 1990s are bid $43.80
August 1990s are bid $64.50
Sept 1990s are bid $91.20

COMPX $100 in the money

June 1890s are bid $109.80
July 1890s are bid $108.60
August 1890s are bid $139.40
Sept 1890s are bid $148.70

COMPX $200 in the money

June 1790s are bid $208.10
July 1790s are bid $206.10
August 1790s are not bid closest are 1800s which are bid $203.80
Sept 1790s are bid $234.10

COMPX $290 in the money (highest option chain shows)

June 1700s are bid $296.90
July 1700s are bid $297.10
August 1700s not bid below 1800
Sept 1700s are bid $308.00

Out of the money

Worst case I would assume is $200 out of the money.

June 2100s are bid zero.
June 2000s are bid $15.50 (55% loss)
June 1990s are bid $19.00 (40% loss)

Observations

The time value seems to be highest for near the money options and slightly out of the money options. The more in the money you get, the smaller the time value.

This market seems to be incredibly illiquid. My experience buying 2 contracts was that the MM sold the first at the $30.90 ask and then tried to raise the ask $5+ for the second contract. It took open 3 way telephone negotiations to get the second contract for $31.70. The order could not be done at all via the internet.

The total open positions in the Sept 2200s now are my two contracts and another two that followed me in yesterday afternoon.

Based on this mornings Philly Option Chain, of all the hundreds of contracts offered, there are open call positions in only two of them. Those 4 contracts and one contract for June 1995s which someone paid $23 for.

It is interesting to note that there seems to have been a close of a call position in June 1870s that sold for $67.90. If that sale was yesterday, someone got screwed royally since the B/A is 131.20 X 151.20.

In an after hours conversation with one of the brokers at MYTrack, I asked about expiry and exersizing the options. Just in case I run into that type of problem where the MM is only going to give me 1/2 the value of the contracts at the other end. He tells me that to exersize the immediately resell, I would have to put up the cash cost of the underlying purchase. That would be $440,000 and while I could raise that much cash, it would trigger a bunch of short term gains taxes that would eat up a substantial part of the profits and then there would be another short term gain tax on the profits themselves. So that is apparently not an option.

Question for Zeev or any of you options pros

Am I at the mercy of the MMs at the other end when it comes time to sell these in the money contracts?

Strategy from this point

Completely undecided.

BT