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Speaking of
options, has anyone taken a gander at the whopping premiums of index options
like the OEX in the current expiration Month ?
Holy moly....lots
of opportunities here in shorting premium if the angst is near it's
max.
2 weeks ago, long
puts was a great position, but RIGHT NOW I can't see going long <any>
options at this juncture, can you ?
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>
<FONT face=Tahoma
size=2>-----Original Message-----From: Ray Raffurty
[mailto:r.raffurty@xxxxxxxx]Sent: Saturday, March 08, 2003 6:00
PMTo: realtraders@xxxxxxxxxxxxxxx; John CappelloCc:
MedianLine@xxxxxxxxxxxxxxxSubject: Re: [RT] Re: Fedback-This Week's
Most Unusual Covered Call
Correction: The <FONT face="Courier New"
size=3>cash in lieu of 0.30422 share of Travelers Property Casualty Corp.
Class A ("TAP.A") Common Stock; plus cash in lieu of 0.84326 share of
Travelers Property Casualty Corp. Class B will be a lot more than what I said
since TAP.A is at is at $14.40 and B is at 14.44. Sorry, but it will be
around $16.20 per contract.
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size=3>
Good luck and
good trading
<FONT face="Courier New"
size=3>
Ray
Raffurty
<BLOCKQUOTE
>
----- Original Message -----
<DIV
>From:
Ray
Raffurty
To: <A title=jvc689@xxxxxxx
href="">John Cappello ; <A
title=realtraders@xxxxxxxxxxxxxxx
href="">realtraders@xxxxxxxxxxxxxxx
Cc: <A title=MedianLine@xxxxxxxxxxxxxxx
href="">MedianLine@xxxxxxxxxxxxxxx
Sent: Saturday, March 08, 2003 5:40
PM
Subject: [RT] Re: Fedback-This Week's
Most Unusual Covered Call
Hi John,If you purchased 100 shares of C and sold
1CLTCC call your are NOTcompletely covered. In August of 2002
Citigroup spun off it's TravelersInsurance division <A
href="">http://www.citi.com/citigroup/press/020820a.htm
anddistributed the Traveler shares to owners of Citigroup stock in the
ratiodescribed at<A
href="">http://www.cboe.com/common/pageviewer.asp?file=02-454.doc&dir=ttstocksm&head=stock%20splits%20%26%20mergers&sec=5Since
options, including the March 15 CCC calls, where trading at the
timethose contracts had to be adjusted to include the shares distributed
and theoption symbols where changed to as the LT thus CLTCC is a
nonconformingoption. At the time of the distribution a new series
was created foroptions sold after that date without the LT symbol to
indicate 100 shares ofCitigroup only. In other words if you owned
100 shares of C in early August2002 and sold (1) 15 CCC call you would
be required to deliver both the 100Citigroup shares PLUS the shares of
Travelers you received, if exercised,and the symbol was changer to
CLTCC. After the distribution date if youpurchased 100 shares of C
and sold 1 CCC 15 call you would be covered. Asfar as I know the
unusual option symbol is always the nonconforming one.If you look at
the attached chart you will see that in every case the optionwith the LT
designation is trading at a higher bid and ask for the samestrike than
the option without the LT. This occurs because the value of
theoptions are determined by adding the value of the various Travelers
sharesto the 100 Citigroup shares.I don't what Smith Barney told
you but CLTCC is a 15 strike, it's just formore than 100 shares
(nonconforming). If you go to the OptionXpress website and go to
the calls only option chain you can check a box to show thenonconforming
options. If the box is checked the LT series shows and if itis not
checked they don't show.I believe the quote you got over the week
end on CCC was erroneous. Theremay not even be a market in that
option currently (in is no longer showingup). It is possible that
the data from which the various option chains arecreated had defaulted
to an old quote when it found no new prices. Also,when you use a
website to search for option yielding a high % on coveredcalls you must
be very careful. They often do not screen out nonconformingoptions
but calculate the % gain based on 100 shares!!!!!!!!!!!!!!!!!!!
Ihave been burned this way and learned to check the CBOE's web site
whensomething looks to good.If you entered an order to sell CCC,
I would question why your brokersubstituted the nonconforming CLTCC and
demand it be undone. He should haverejected the order or given you
the price on CCC. If, however, you enteredthe order to sell CLTCC
you need to either close the trade before expirationor plan to purchase
the various Traveler's shares required to be covered(more
commissions). In this case, perhaps your kindly old broker will
undothe trade..., NOT. You can always do nothing, but you will be
shortTravelers on 2/24/03 after the options are exercised. You can
then buy toclose the short, but the market has a way of moving to make
this the worstpossible outcome, not to mention additional
commissions.The short will be: 4 shares of Travelers
Property Casualty Corp. Class A("TAP.A") Common Stock; plus 8 shares of
Travelers Property Casualty Corp.Class B ("TAP.B") Common Stock; plus
cash in lieu of 0.30422 share ofTravelers Property Casualty Corp. Class
A ("TAP.A") Common Stock; plus cashin lieu of 0.84326 share of Travelers
Property Casualty Corp. Class B("TAP.B") Common Stock.Also
notice that there are 2 "cash in lieu of" components. This means
youwill need to pay out that cash to the option holder ($1.15 per
contract).This cash is probably to adjust for fractional shares that
wheredistributed, but which could not be accounted for
otherwise.I think the odds are against you on this and you will be
lucky if you onlytake a small loss. Unfortunately the market does
not hand out money thisway. Occasional there will be small
discrepancies in option price to stockprice, pennies or less. Then
professionals will move quickly on volume andlow commissions to close
the discrepancy.Good luck and good trading,Ray
Raffurty----- Original Message -----From: "John Cappello"
<jvc689@xxxxxxx>To: "Ray Raffurty" <r.raffurty@xxxxxxxx>;
<realtraders@xxxxxxxxxxxxxxx>Cc:
<MedianLine@xxxxxxxxxxxxxxx>Sent: Monday, March 10, 2003 2:07
PMSubject: Fedback-This Week's Most Unusual Covered Call>
Dear Ray,>> I just did a double check with Smith Barney and
the correct symbol> for the $15 strike price is CLTCC.... which is
what I sold. Options> Express also confirms this. The other
designations just further> describe the Travelers acquisition from
last year...and have nothing> to do with pricing other than
history.>> When I first looked at this trade, the $17.50
strike price was in the> profit mode to sell the call and buy the
stock...that is now close to> parity.>> Hope this
helps.>> Sincerely,>>
John>>>>> ------------------ Reply
Separator --------------------> Originally From: "Ray Raffurty"
<r.raffurty@xxxxxxxx>> Subject: Re: [RT] This Week's Most
Unusual Covered Call> Date: 03/08/2003
06:54am>>> [Attachment]>To
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