HSX Forum

Playing & Trading Strategy

Calls and Puts have always been a way for the smaller investor to "get in on the action" They only cost 20K each to buy

Posted by: Buy BONDS 20 (a.k.a StarBondFund) on Jun 25, 16:06 in response to Quickslver99's post answer...

and you have to have a feel for how the opener will move in relation to the strike price.  If the strike is 30, then an opening of 35 makes 5 points for the CALL.  You can also short if you feel that the movie opener is going in one direction or another .  If you felt that the movie would open at about 35, then you short the PUT and long the CALL and make money on each.  If you think it will open at 25 (strike 30) then you long the PUT and short the CALL.  Money to be made, but on a smaller scale.  Note...sometimes the costs of the PUT and CALL go in opposite directions to the expected delist based on the cost of the underlying stock.  So you can see both the PUT and the CALL be over 2, rather than one high and one near zero.  Go figure.

OW options are on a larger scale.  100K shares; price is based on the opening weekend, so the same 30 strike  costs 300K to buy in.  Since the price of the derivative is constantly changing, the effective strike keeps changing.  If it looks like the opening will be near 35, the value of the OW will be rising.  Bad news and it might drift lower. If it looks like it is going to more like 25, the value of the OW will be lower.  Since these halt on the day of release, there is gut check as to long or short from the "current price" at halt.

While you can play the PUT and CALL both ways, the OW is either a long or short based on the HALT price.

Historical note:  When you first joined HSX, weekend movies were halted on the day of their opening, not Saturday night.  Friday gut checks (long or short) were really based upon how you felt about the MovieStock.  When the Saturday halt was instituted, the .OW deriviatives were added as a "gut check" just on a slightly smaller scale.

 





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