Monday, November 14, 2011
RMBS Update
Bought back my short Nov 20 calls and rolled to Jan 20 for a credit of $1.85. Considered seeing if these will expire worthless this Friday, but decided that I do not want to take risk of a lot of IV disappearing after jury decision which could come at any time. Furthermore if Rambus loses the case the share price will tank, so this credit provides a lot of protection against that event. Still have 1/2 of my shares covered with strike 18 calls, will let those ride through expiration and see what happens.
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I stopped following RMBS after I got stopped out, is there a decision near? I'm interested to see how this all plays out.
ReplyDeleteThe jury has been deliberating for several weeks now - a decision could come tomorrow, next week, or next month. For me it is good to take as long as possible, keeps the option premium high and has helped bring my average cost way down by selling covered calls the last few months.
ReplyDeleteVolatility in RMBS options just spiked, looks like a decision has been reached. Shares should pop a lot higher or lower very soon. Unfortunately have to go to work in a few minutes so will not be able to watch it on screen.
ReplyDeleteYeah my buddy just called and asked why the BxA on RMBS options was .0 x $5.00. Trading is currently halted in RMBS and MU.
ReplyDeleteSee that RMBS lost the case so shares will tank. Guess I will be selling covered calls on this for a long time.
ReplyDeleteWow, this dropped a lot further than I thought it would, I was thinking maybe down to $13 or $10 at worst. Took a gamble and got kicked in the balls - that is the way it goes sometimes. Will just need to be smarter next time and keep milking premium from the options on this thing in the meantime I suppose.
ReplyDeleteSame here buddy, I gambled on short ZB and ripped myself a new butt-hole. Like you, I had what I perceived to be a worse case scenario in mind but turns out I was way wrong and had to pay the piper. The only good news is it didn't put me out of the game and as long as I take away the learning experience it will make me a better trader. Besides, I always wanted a second butt-hole.
ReplyDeleteTrade Update: Sold the Jan 9 calls for $0.41 today. IV in RMBS has come down but this still brings down cost basis for the position a fair amount.
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