Wynn

[New-born baby]

Are you saying WYNN is going up or down?

What's valuation are you talking about? Do you trade that theory? Does it make money?

Lemon,
One way to scan for stocks moving up is looking for the cheapest puts around. When I say "cheapest," I mean lowest cost per dollar value. The vice versa works, too. Here we have a high dollar stock, WYNN, at $93+, and the option for $90 DEC call (more than one month away) sports a tiny time value of $.90. It is the cheapest time value you can buy in the entire market at this time: no exceptions. So it signals that nobody believes WYNN is going to be worth $90 on the third Friday in DEC.

Does the system work? Why of course! People make money selling this info to suckers, er, customers. Ever heard of Dr. J? Of "Stockoptions.com?" How about the world famous "heat seeker" options plays? No? Then click HERE

[lemonjello]

Najarian? 'nuf said.

Just looked at the option chain the puts are fat and the calls are thin. LOL. That just tells me you should be selling the puts and buying the calls and that most of the people are usually wrong.

If you've got cash laying around you could short 1000 shares and sell Dec 90 puts against it / buy the Dec 90 calls and come out about 3k ahead in 30 days on about 50k margin or about 6% return on one month on virtually no risk assuming there would be no net effect from the dividend adjustment (not sure if that's true since the div adj on options for big div has special rules.)

Thoughts?

Lemon,
One way to scan for stocks moving up is looking for the cheapest puts around. When I say "cheapest," I mean lowest cost per dollar value. The vice versa works, too. Here we have a high dollar stock, WYNN, at $93+, and the option for $90 DEC call (more than one month away) sports a tiny time value of $.90. It is the cheapest time value you can buy in the entire market at this time: no exceptions. So it signals that nobody believes WYNN is going to be worth $90 on the third Friday in DEC.

Does the system work? Why of course! People make money selling this info to suckers, er, customers. Ever heard of Dr. J? Of "Stockoptions.com?" How about the world famous "heat seeker" options plays? No? Then click HERE

[DSteckler]

Short sellers of stock owe the dividend, if short on the record date.

[lemonjello]

Wouldn't everything be adjusted down for the divy? If you have to pay the divy and the stock moves down and the option strikes are all adjusted down $6 by the exchange you would be in the same position as before except you would be up 6k on the short which you would eventually have to kick out. The original 3k lock would still be in tact.

Short sellers of stock owe the dividend, if short on the record date.

[DSteckler]

Strike prices are not adjusted for an ordinary dividend.

[lemonjello]

Is $6 an ordinary divy? I've seen the option rules at one point on this, I'm guessing they will be adjusted by exchange. I'm sure a call to a reputable option broker would give you the answer post haste.

Strike prices are not adjusted for an ordinary dividend.

[New-born baby]

Strike prices are not adjusted for an ordinary dividend.

Dave is correct.

I've seen dogs like WYNN and FRO. Big divys. Big hits once the divy payout hits the market. Shorting the stock is risky. PUTS are too expensive. WYNN will fall much more than the $6. In fact I assume the last couple of days before the ex-date will be down days. Lots of folks are jumping on board now simply for a quick ride up, but they'll leave the train before the ex-date. A naked call sold the day before the ex-date is the safest play. And it'll have to be out of the money or else they will call you on it as soon as it becomes breakeven for them.

[lemonjello]

Are you and Dave POSITIVE that it's an ordinary dividend that won't be adjusted in the strikes?

Not that I'd say anything, but I've already noted that Dave shouldn't be messing with options in Doc's thread. Math problems.

Dave is correct.

I've seen dogs like WYNN and FRO. Big divys. Big hits once the divy payout hits the market. Shorting the stock is risky. PUTS are too expensive. WYNN will fall much more than the $6. In fact I assume the last couple of days before the ex-date will be down days. Lots of folks are jumping on board now simply for a quick ride up, but they'll leave the train before the ex-date. A naked call sold the day before the ex-date is the safest play. And it'll have to be out of the money or else they will call you on it as soon as it becomes breakeven for them.

[New-born baby]

Are you and Dave POSITIVE that it's an ordinary dividend that won't be adjusted in the strikes?

Not that I'd say anything, but I've already noted that Dave shouldn't be messing with options in Doc's thread. Math problems.

Dave's a good man. And I agree with him that the strikes do not get adjusted down. They don't do that for XOM; they won't do it for WYNN.

I think WYNN returns to $77.50 minus! after the divy within 90 days.

[New-born baby]

Long call

Okay Lemon. You want it bad? You'll get it bad. You want it real bad? You'll get it real bad

Here's a play for you:
Buy WYNN. ANY price will do. Doesn't matter.

SELL the JAN 07 $75 call for (currently) $17.50. You get the divy; you get your money back in JAN. IF WYNN looks to fall further, adjust the strike lower. This is how I would play it.

EDIT: here's your solution. Buy the stock and sell the JAN 07 $85 call. You can do this and earn a time premium of $.20 per share. Now that protects you down to $85, and if you sell TWO calls per share, you'll come out smelling like a rose.

[lemonjello]

Since you and Dave are nice guys and are 100% positive that there is no strike adjustment, I'm sure you all wouldn't mind placing a small bet.

How about a $1000 donation from you to the Salvation Army in my name if I win and I'll do the same for you if you win.

Dave's a good man. And I agree with him that the strikes do not get adjusted down. They don't do that for XOM; they won't do it for WYNN.

[lemonjello]

BTW, this bet is also open to Dave or any other senior member of the MM site.

Since you and Dave are nice guys and are 100% positive that there is no strike adjustment, I'm sure you all wouldn't mind placing a small bet.

How about a $1000 donation from you to the Salvation Army in my name if I win and I'll do the same for you if you win.

[New-born baby]

Since you and Dave are nice guys and are 100% positive that there is no strike adjustment, I'm sure you all wouldn't mind placing a small bet.

How about a $1000 donation from you to the Salvation Army in my name if I win and I'll do the same for you if you win.

Thanks, but no thanks. I don't bet.

Hey, did you check out those $85 calls?

[lemonjello]

Don't think of it as a "bet", think of it as a charitable wager or a defense of your option expertise - they don't make these wagers in LV.

Any other takers? Dave? Defend your option expertise!

Thanks, but no thanks. I don't bet.

Hey, did you check out those $85 calls?

[DSteckler]

Since you and Dave are nice guys and are 100% positive that there is no strike adjustment.

I never said that. I said an ordinary dividend payout does not affect the strike price.

The SSF for WYNN is being reduced by $6 but the stock options are not. OPRA has a 10% threshold requirement before making a change and since $6 is less than 10% of the stock price, there will be no reduction or adjustment in the strike prices.