BCE put options tell a story

3 responses

  1. Fred says:

    An alternate trade for the puts would be a write transaction. The Jun 40 last traded at 3.75 impying a purchase price of 36.25 if you are exercised against. Assuming the deal closes as origianlly priced, you walk away with the premium in two months in exchange for tying up a little margin. If the deal gets renegotiated and closes around 38.00 which is what the market seems to be telling us, you still pocket 1.75. The risk is the deal falling apart altogether. The problem here is that the MX is not quoting any other June strikes, otherwise you could buy the 35’s as downside protection. All in all, a good trade if you think the deal will get done.

  2. Mark McQueen says:


    My broker told me the exchange pulled all of the calls a short while ago; no one can use this traditional method to earn premium and protect themselves.

    We are just left with outrageous premiums on puts, but no juicy premiums on calls.

    As they say in Vegas, it’s always better to be the house than the player.


  3. Fred says:

    Hey Mark…Thanks for the reply. It was actually the puts I was looking at. If you think the deal will get done for north of 36.25, being short the June 40 puts is a winner.

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