I agree but there are not that many buying lots of puts 12 dollars out on a put that expires in 7 trading days.Other than insider shit , and they go to jailBottomsUp said:
Bear Stearns is toasted
- Thread starter danmand
- Start date
bear stearns was one of the big five new york banks that was packaging low interest and negative interest loans with credit card debt etc that fueled the you can buy it but we know you cant pay for it housing in the states . They hit a credit crunch when nobody would but the packages for the last few months, for obvious reasons.
One of the big american business shows ( cant remember which) pointed out several months ago that all 5 of these banks were skating on very thin ice from a capital and available credit point of view. Apparantly the hens nave come home to roost
One of the big american business shows ( cant remember which) pointed out several months ago that all 5 of these banks were skating on very thin ice from a capital and available credit point of view. Apparantly the hens nave come home to roost
Well actually. there are 21000 open interest on the March 35 now !BottomsUp said:
Which means there was nothing even close to what Boffo was talking about ,
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Hank Reardon said:
Ha, ha, ha...just like the people in Asia who heavily shorted the airline stocks right before 9/11.
Only dealing with 1 stock here , and my point really was about the non issue of the guy Boffo was talking about, but whatever,
Yep, those insider traders are hard to catch, from Reuters....
Court overturns Nacchio insider trading conviction...
http://www.reuters.com/article/ousiv/idUSN1731929320080317?sp=true
Court overturns Nacchio insider trading conviction...
http://www.reuters.com/article/ousiv/idUSN1731929320080317?sp=true
Dam, the brokerage stocks sure moved alot today.
Lehman Bothers--LEH went as low as $20.25 today, last I seen it was at $33!
Some people are making a killing today...and some gotten killed too.
Lehman Bothers--LEH went as low as $20.25 today, last I seen it was at $33!
Some people are making a killing today...and some gotten killed too.
Wow !
Thats gotta be a first !!
Some people made lots and some people lost lots on the market today !!S.C. Joe said:
Thats gotta be a first !!
Billionaire Joe Lewis took a one billion dollar hit 
http://www.reportonbusiness.com/ser...317/BNStory/Business/home?cid=al_gam_mostview
http://www.reportonbusiness.com/ser...317/BNStory/Business/home?cid=al_gam_mostview
Don't bother trying to have an intelligent conversation with Hank, he is always right in his own mind.Hank Reardon said:
Well even you must admit that his comment of ''some made a killing and some got killed'' is pretty obvious in the stock market !!!petitelover said:Don't bother trying to have an intelligent conversation with Hank, he is always right in his own mind.
Jim Cramer on Stearns "its fine": http://ca.youtube.com/watch?v=gUkbdjetlY8
Then tries to bullshit his way out of his mistake : http://ca.youtube.com/watch?v=AyGc_rlF8aA
Then tries to bullshit his way out of his mistake
: http://ca.youtube.com/watch?v=AyGc_rlF8aAHere's a simple explanation for why BSC is trading at above $4.80 than the offer price of $2
Short Answer: Options
Some traders will give you wrong answers like Short
covering and other clueless replies, but that is not what it is about.
No Idiot is going to buyback a $50 Bill with a $100 bill (Unless some 'smart' Wall-street idiots)
Long Answer:
JPM is actually giving 0.054 shares to 1 BSC share.
So, A BSC investor is not actually getting $2 cash, but a MAX (0.054x
JPM, BookValue of BSC).
That is the investor has a downward protection of 0.054x JPM stock and
and upside potential of Actual BookValue of BSC. This is a classic
option instrument where you get MAX (Stock-Strike, 0)
So, BSC at minimum would trade at 0.054x of JPM's share price. But
there is an upside potential for BSC.
Between now and the actual close, good things can happen in this world
and people may discover that the BSC's books is not bad at all and its
equity value may be worth $5, $10, or even $30. There is a remote
probability that such a thing can happen
If BSC were trading at $2, (Technically at 0.054x JPM) Smart Investors
would do the following
Buy 1 BSC share = -$2
Short 0.054x = +$2
Total = $0
I have two positions with $0 Invested from my pocket
During closing, one of the two following scenario can happen
i) BSC is really crap and the JPM deal is the best they can get. I use
my 0.054 share that I get from JPM to cover my short. I make $0 here
ii) I have different valuations for BSC books at varying
probabilities. In which case BSC stock would grow accordingly. Lets
take an example, BSC is worth 0.07x JPM(Say $3 for convenience) on the
books
I Sell my 1 BSC share +$3
I Cover my 0.054x short -$2 and I make $1 here (or Technically 0.016x
JPM)
So there is an arbitrage opportunity at $2 (technically at 0.054x
JPM), where you are essentially getting a 'lottery ticket' for free.
Since in a free market, there is no such thing as free lottery ticket
(which is really equivalent to a call option), BSC trades at $2 + a
Call Option. The market has decided that Call Option is worth $2.50
(considering BSC's huge volatility, it is a fair game)
Note: For really advanced readers, I've ignored the interest rate
implications that occurs when shorting a stock
Short Answer: Options
Some traders will give you wrong answers like Short
covering and other clueless replies, but that is not what it is about.
No Idiot is going to buyback a $50 Bill with a $100 bill (Unless some 'smart' Wall-street idiots)
Long Answer:
JPM is actually giving 0.054 shares to 1 BSC share.
So, A BSC investor is not actually getting $2 cash, but a MAX (0.054x
JPM, BookValue of BSC).
That is the investor has a downward protection of 0.054x JPM stock and
and upside potential of Actual BookValue of BSC. This is a classic
option instrument where you get MAX (Stock-Strike, 0)
So, BSC at minimum would trade at 0.054x of JPM's share price. But
there is an upside potential for BSC.
Between now and the actual close, good things can happen in this world
and people may discover that the BSC's books is not bad at all and its
equity value may be worth $5, $10, or even $30. There is a remote
probability that such a thing can happen
If BSC were trading at $2, (Technically at 0.054x JPM) Smart Investors
would do the following
Buy 1 BSC share = -$2
Short 0.054x = +$2
Total = $0
I have two positions with $0 Invested from my pocket
During closing, one of the two following scenario can happen
i) BSC is really crap and the JPM deal is the best they can get. I use
my 0.054 share that I get from JPM to cover my short. I make $0 here
ii) I have different valuations for BSC books at varying
probabilities. In which case BSC stock would grow accordingly. Lets
take an example, BSC is worth 0.07x JPM(Say $3 for convenience) on the
books
I Sell my 1 BSC share +$3
I Cover my 0.054x short -$2 and I make $1 here (or Technically 0.016x
JPM)
So there is an arbitrage opportunity at $2 (technically at 0.054x
JPM), where you are essentially getting a 'lottery ticket' for free.
Since in a free market, there is no such thing as free lottery ticket
(which is really equivalent to a call option), BSC trades at $2 + a
Call Option. The market has decided that Call Option is worth $2.50
(considering BSC's huge volatility, it is a fair game)
Note: For really advanced readers, I've ignored the interest rate
implications that occurs when shorting a stock
I thought a stock had to be over $4 to short it? Well maybe with options you can get around that.
I never understood options Every time I look deep in to them, I came out with a headache, ha ha.
Maybe just as well.
I never understood options
Every time I look deep in to them, I came out with a headache, ha ha.Maybe just as well.
