I bought some US Steel calls on Friday that got IV crushed to oblivion today. Luckily, I only kept 6, initially, I had 20.
Then, I saw how low the premium was going on leaps that were good until next year, at the $55 strike, so I just kept buying more until I had 40 contracts.
Now, these contracts are relatively cheap, getting as low as $0.14 and they’re good till January. However, due to the more or less set deal to buyout the company at $55 per share, it seems inevitable for the strike to be reached but this inevitability has further crushed the IV…
My question is: does it actually make sense to hold contracts for something that has a known future value that’s identical to the strike? The deal can change or reveal new details that change the stock’s value, so it’s not 100% certain the price will go to $55 and be capped there.
Thoughts on the value of these contracts?
Posted by HugeAd5056
1 Comment
Why would anyone pay a premium for calls that will at best break even (minus fees)?