know a couple of friends who trade options, they ussually take very large positions over a few days.
well they have in the past couple of weeks wrote sold some BNS Jan 10 puts. 40. (most were 40).
believe they did this on montreal.
scotiabank is currently trading at 45.75cnd 45.21US and yields around 4.20%. low 41 high 57... though has held up well in 2008 for the most part...
now if you get 3.50-4 cdn. so you write 1 put contract. you are on the hook to buy bns for 40 until the third friday of Jan 2010. in exchange they pay you 350-400.
do not care to sell options over a year, longest option ever written (sold ) was 13 months. most of them are 1-5 months in duration.
there is just so much fear with the financials, and talk of some large US financials write offs, the size who knows. In Canada the largest appears to be CM, CIBC anywhere from 1-4 billion.
BNS will be effected but far less than CM, I own some BNS and would consider adding to the position below 44. was there once and rallied to 50 and now is falling back.
earnings look to be flat and they even increased teh div last time, their int. and domestic operations are doing well, especially in this climate.
however why sell a large number of puts on any bank stock 2 years out... wait until the noise dies down, you may get a slightly lower price however may face less risk.
these options may trade up to 5-6, so though not a bad trade, would have waited.
thanks
selkirk
well they have in the past couple of weeks wrote sold some BNS Jan 10 puts. 40. (most were 40).
believe they did this on montreal.
scotiabank is currently trading at 45.75cnd 45.21US and yields around 4.20%. low 41 high 57... though has held up well in 2008 for the most part...
now if you get 3.50-4 cdn. so you write 1 put contract. you are on the hook to buy bns for 40 until the third friday of Jan 2010. in exchange they pay you 350-400.
do not care to sell options over a year, longest option ever written (sold ) was 13 months. most of them are 1-5 months in duration.
there is just so much fear with the financials, and talk of some large US financials write offs, the size who knows. In Canada the largest appears to be CM, CIBC anywhere from 1-4 billion.
BNS will be effected but far less than CM, I own some BNS and would consider adding to the position below 44. was there once and rallied to 50 and now is falling back.
earnings look to be flat and they even increased teh div last time, their int. and domestic operations are doing well, especially in this climate.
however why sell a large number of puts on any bank stock 2 years out... wait until the noise dies down, you may get a slightly lower price however may face less risk.
these options may trade up to 5-6, so though not a bad trade, would have waited.
thanks
selkirk
