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The math isn't that hard
Posted by: JohnTEQP on Jul 28, 22:04 in response to GuitarGenius7's post call / put theory help
There's only one math equation that you might need a calculator to calculate. SMURF is currently trading at H$60, and it's Thursday night, so it will probably adjust to something around that. Which translates to an opening weekend of about $22 million (60/2.7=22.2 - the calculator gives you a nice precise number). Compare that number, 22, to the strike price, H$25.
The call is a bet that it will open above the strike price. But it looks like it will open below the strike price. So short the call.
The put is a bet that it will open below the strike price. Which it looks like it will. It will probably open about H$3 - H$4 below the strike price, and the put is currently at H$3.85. So it isn't really worth it investing in the put, because it probably won't go up or down dramatically in value. If you buy it at H$3.85 and it cashes out at H$4, you make 15 cents for every put. If you buy it at H$3.85 and it cashes out at H$3.50, you lose 35 cents. Not really worth it.
[SMURF] [SMURF.CA] [SMURF.PU]
Tag(s): SMURF
call / put theory help GuitarGenius7 Jul 28, 19:51
Ok, bear with me... accountant_4_Jesus Jul 28, 20:13
Correction, the Call for The Smurfs is for $25M, not $20M. {nm} accountant_4_Jesus Jul 28, 20:14
A call says the movie will hit the strike price. A put says it won't. LONG the choice you agree with and SHORT the one you disagree with. {nm} PVL Admin Jul 28, 20:45
Unless you think it will only miss or hit its strike price by a minuscule amount, in which case you short both Call & Put. {nm} accountant_4_Jesus Jul 30, 05:40
The math isn't that hard JohnTEQP Jul 28, 22:04
I'm a little surprised to hear a seasoned player say that 'because it is trading at $60, so it will probably adjust near that' ndmaster Jul 28, 22:26
Yeah, I was pretty spectacularly wrong on this one JohnTEQP Aug 01, 12:17
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