Replies to post #326463 on InterDigital Inc (IDCC)

[postyle]

olddog,

Actually, he can sell his contracts for a gain tomorrow - provided the value of his options go up. For example, if IDCC stock makes a run into earnings on Wednesday evening, let's say from the current level back up to $82, it's highly likely that Joel would have the opportunity to sell his contracts for a very large gain.

There are many scenarios where one can profit from options without actually holding them all the way through to expiry. The previous explanation of Joel's trade from situps00 was too simplistic and was, imho, intended to ridicule the trader.

There are many possible outcomes between now and Sept 17 where owners of the Sept $105s can come out with a gain. Of course, there are many more where they won't. It's a speculative position to open, especially with no other corresponding trades linked to it.

Any gain, however, appears to be dependent on some type of announcement before September 17 of a buyout offer in excess of $115.

[FISH21049]

olddog967: It's scary trying to do options when you don't know the whole picture. I did options a couple of times on IDC and they expired worthless. I let my broker handle it and I think I lost money because HE didn't sell before the expiration date, but it's been soooo long, I just don't remember. That'left a bad taste in my mouth and that's why I never tried them again.

If I knew I could use $1,500 in dividends rather than buying 1,500 shares at $70+ it might be worth the 'gamble' IF one knew that the maximum risk/loss on the options would be $1,500.

[jmspaesq]

Olddog:Well a couple of things could happen but basically you're right. Since options trade on their own, let's say we get a favorable CAFC decision but no further developments in the buyout but buyout news is still pending. The value of those calls will probably increase enough to take profits and sell them and reinvest into DEC and JAN calls. Also hedging by buying some now for DEC and JAN even though paying a bit higher premium for them.

So my SEP calls could expire worthless, I lose $1200 or so but if DEC or JAN hits then I'm still way to the good.

I didn't buy August (less premium for time value so cheaper) because I'm not sure that we get the first tender by then or more news about the talks, who else is interested etc. So I wasn't sure that was enough time although that would be about a month since the first announcement and one might infer that talks had already progressed to a point that the BOD made the announcement.

So I think Sept 17 we'll know enough to make that a good bet on my part but DEC and JAN seem even surer so I'm gonna risk some on those too--which will all be good if it happens earlier too, then I'll have SEP JAN AND DEC calls all in the money!

And thanks--Good luck to us all!