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What are you buying today?


LowIQinvestor

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4 hours ago, gokou3 said:

Swapped BAM into BN at par.

 

Bought OXY.WS

 

I just took my first look at the OXY warrants, they're exercisable before august 2027 at $22 per share, so it seems like they're trading for close to the intrinsic value, am I reading this wrong? 

 

Seems like it could be a good trade to buy these warrants and then sell OXY calls against them. 

 

Buy OXY warrants at the $38.36 close, then sell June 24 $70 calls for $8. If it gets called away then you make $17.64 profit on a $30.36 cash outlay. If it doesn't get called away you have a cost basis of around $52.36 on OXY and still get to write numerous additional options before warrants expire. I'm sure you could max the IRR here by selling shorter term call options. 

 

For example you could sell the May $65 calls for about $3, and then just roll them up and out if the options go ITM. 

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36 minutes ago, RedLion said:

 

I just took my first look at the OXY warrants, they're exercisable before august 2027 at $22 per share, so it seems like they're trading for close to the intrinsic value, am I reading this wrong? 

 

Indeed not much time value in these warrants - just about $0.40 of time premium plus the foregone dividends relative to buying the underlying stock.  I guess if the company decides to increase the regular dividend payout, as a warrant holder I am slightly hurt by it (don't think there's any strike adjustment for regular dividends), but this seems to be already reflected in the small warrant premium.

 

My brokerage account doesn't support this technically uncovered calls so no comment on it.

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1 hour ago, gokou3 said:

Indeed not much time value in these warrants - just about $0.40 of time premium plus the foregone dividends relative to buying the underlying stock.  I guess if the company decides to increase the regular dividend payout, as a warrant holder I am slightly hurt by it (don't think there's any strike adjustment for regular dividends), but this seems to be already reflected in the small warrant premium.

 

My brokerage account doesn't support this technically uncovered calls so no comment on it.


yeah, my brokerage won’t support it either. I agree the trade (buying the warrants and selling the calls) is interesting.

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@gokou3 @Stuart D

 

I just bought 100 OXY warrants at 36.88 and sold an 8/18/23  $70 CALL for $3. So I got back all the time value plus a couple bucks. 

 

I think my brokerage is NOT treating this as a covered call, but I have privileges to short naked calls, so I'm not sure it makes a difference. I just put this on in with one contract, but I'm going to look at scaling this position up and writing different strikes and duration calls against the underlying position to see how it goes. 

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what is the difference between fih.u and ffxdf? I've been trying to figure out off and on for a bit but the best I can find is the difference in exchanges...fih.u is the toronto exchange and ffxdf is the OTC... 

 

Is there no difference in the underlying other than liquidity, correct?

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1 hour ago, RedLion said:

Just bought a slug of the Oxy warrants at 36.75. Might write some calls against some of the position, but I’m short on oil exposure in the portfolio anyway, the leverage is very cheap, and Buffett might well keep buying around this price to put a floor on it. 

 

 

Given you have to pay short-term capital gains on expired calls regardless of duration, wonder if writing calls is worth it for giving up the opportunity for bigger gains.

Edited by LearningMachine
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32 minutes ago, Eng12345 said:

what is the difference between fih.u and ffxdf? I've been trying to figure out off and on for a bit but the best I can find is the difference in exchanges...fih.u is the toronto exchange and ffxdf is the OTC... 

 

Is there no difference in the underlying other than liquidity, correct?

No difference really, but the FFXDF is less liquid because it's a small cap Canadian company trading on a US exchange.  Sometimes I don't see a resting bid/ask at all on FFXDF so make sure you put a limit order, not a market order.

 

Some US brokerages won't let you trade on the foreign exchanges. At my brokerage I have to buy FFXDF, not FIH but because it's not very liquid it makes me do two-factor authorization and I have to do it as a limit order. 

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30 minutes ago, LearningMachine said:

 

 

Given you have to pay short-term capital gains on expired calls regardless of duration, wonder if writing calls is worth it for giving up the opportunity for bigger gains.

Agreed. I’m going to be looking for longer expiry options for this reason if I write options against more of the position. 

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5 hours ago, Saluki said:

No difference really, but the FFXDF is less liquid because it's a small cap Canadian company trading on a US exchange.  Sometimes I don't see a resting bid/ask at all on FFXDF so make sure you put a limit order, not a market order.

 

Some US brokerages won't let you trade on the foreign exchanges. At my brokerage I have to buy FFXDF, not FIH but because it's not very liquid it makes me do two-factor authorization and I have to do it as a limit order. 

Thank you. That is what I thought but wasn't sure. My brokerage only offers FFXDF. 

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