Replies to post #113190 on Avid Bioservices Inc (CDMO)

[ImaPseudonym]

What do you think would explain the huge difference in open interest and barely any recorded volume?

I agree that, on its face, exercising April 2.50 options seems stupid.
Is there a non-stupid way to have closed them out and not have any volume show up? Or is the only alternative explanation that the large open interest was a glitch/the volume didn't show because of a glitch.

[Protector]

investingdog, that is not completely correct.

1) You can ALWAYS exercise a US option (in or out of the money)
2) The reasons for doing it can be several:

- you fill your position with a call option and then exercise it so that you get this (large 2Milj shares) without rising the pps (it becomes someone else problem). If this is the case I don't understand why they didn't do it with a MARCH @1 (much cheaper)

- you can do it to be sure you have the shares in your portfolio at all times and protect against further pps drop (remember we had a bear raid so selling the shares and buying the options and getting the rest of the money on your account could be strategy which cost you some but protects the bulk). Again here, wrong option, a cheaper APRIL would fit that better and it is an expensive gamble. Buying a PUT would have been cheaper.

- Margin call, would be outside the control of the holder. I would exclude that also as a reasons for exercising. There was more money to make by simply selling the options for the premium then to pay the strike @2.5 for something you must sell below 2$ to get the cash!

- I should read back the Option Trading Rules but there is a large paragraph in there about WHO LEGALLY REPRESENTS the shares underlying option contracts (the option seller or buyer). So a reason for doing this could be that someone needed 2Milj shares where it was important that he could represent them and not raise the pps in buying them. Maybe these rules (and again I should check but really don't feel like reading that boring text) say that for a vote the holder of the option can only represent the share if the stock trading is NOT suspended (because options MAY NOT be trading if the underlying stock doesn't trade, so there is an exercising problem at that precise moment).



But we have no Annual Meeting coming up soon (and you only need to have the shares in August I think), we pay no coupons or quarterly coupons, and we are not being acquired. So if someone did it because of that (because I give you it is very unusual and extremely expensive if that person exercised those option call and everything points to it that they did) then that person must have had inside information about an upcoming event where possession of the shares is important.

Also that call options purchase was cleverly hidden the same day because except from looking at the bid/ask T&S it was difficult to speculate as to the direction (sell->open interest down or buy->open interest up) until the day after.

SELLING THEM IN A COORDINATED BEAR ATTACK IS NONSENSE. They paid 2.70$ in total. Unless of course the attack will first bring us to 3$ and they sell them then!