CBA - Commonwealth Bank of Australia

[Captain_Chaza]

My Apologies for Posting in the Wrong Thread
It Would be appreciated if Someone could Move it to The Storm at Sea

 

[qldfrog]

Just a small comment :
CBA had a great day today with the Santa F1 race:

yet, my short (put CBA3V7) purchased at $6.2 on the 18/12 are now at $ 9.78 '
3 sessions later..not sure what it means but a bit unexpected...not that I complain

 

[Sharkman]

yet, my short (put CBA3V7) purchased at $6.2 on the 18/12

Sorry what? Short puts are sold, long puts are purchased... am guessing you did the latter, as your previous posts seem to suggest you're bearish CBA?

are now at $ 9.78 '
3 sessions later..not sure what it means but a bit unexpected...not that I complain

It's not $9.78 now, it *was* $9.78 when the last person traded it. Looks like the underlying was about $153 at the time, giving an IV of about 21 (assuming that they traded at the mid, and that next year's Feb div will be the same as this year's). At the closing price of $154.68, a 21 IV gives a theoretical price of $8.80 or so (although IVs generally tend to drop when the broader market goes up so that might be a bit overpriced). Still a tidy gain for you so far though, if you are in fact long those puts at $6.20.

 

[qldfrog]

Sorry what? Short puts are sold, long puts are purchased... am guessing you did the latter, as your previous posts seem to suggest you're bearish CBA?



It's not $9.78 now, it *was* $9.78 when the last person traded it. Looks like the underlying was about $153 at the time, giving an IV of about 21 (assuming that they traded at the mid, and that next year's Feb div will be the same as this year's). At the closing price of $154.68, a 21 IV gives a theoretical price of $8.80 or so (although IVs generally tend to drop when the broader market goes up so that might be a bit overpriced). Still a tidy gain for you so far though, if you are in fact long those puts at $6.20.

Yes, sorry for the lingua
i am long these puts as i expect cba to fall on the medium to long term from current crazy PE.

 

[TimeISmoney]

Yes, sorry for the lingua
i am long these puts as i expect cba to fall on the medium to long term from current crazy PE.

Your strike price for that option is at $156,

breakeven point is at (156-6.2= 149.8).

Is that correct?

 

[qldfrog]

Your strike price for that option is at $156,

breakeven point is at (156-6.2= 149.8).

Is that correct?

My understanding indeed, plus costs/fees

 

[qldfrog]

My understanding indeed, plus costs/fees

Obviously, there is an insurance premium, so even with SP at $149/$150 the option will still have some extra value , decreasing until expiry

 

[Sharkman]

Took a look at those options for curiosity's sake, seems I wasn't too far off on my estimate, with the stock barely moved from last close the MMs were showing 8.14/9.04 for a 8.59 mid, as expected IV did back off a bit after the mini rally since yest midday.

Also noticed that the open interest is 2524 contracts... all of them yours I take it qldfrog? That is one massive bearish bet!

 

[qldfrog]

Took a look at those options for curiosity's sake, seems I wasn't too far off on my estimate, with the stock barely moved from last close the MMs were showing 8.14/9.04 for a 8.59 mid, as expected IV did back off a bit after the mini rally since yest midday.

Also noticed that the open interest is 2524 contracts... all of them yours I take it qldfrog? That is one massive bearish bet!

Not at all,i just ordered and got 3 last week
I have been banging here that current CBA PE is utter madness and wanted to back this with a bit of coins
Ideally i would have bought more but not in june expiry which is too soon was looking at 2027, and pricing is far too expensive, plus so illiquid it is not funny.
And did i mention the fees/brokerage....
I have given up on options in the asx market .

 

[Value Collector]

Your strike price for that option is at $156,

breakeven point is at (156-6.2= 149.8).

Is that correct?

Yes, for frog to recover the $6.20 he spent, the CBA shares have to have dropped to $149.80 by mid June.

However, up until expiry date they also carry some time value, but that time value decays away as the time left until expiry date disappears.

So right now there is about $1 of intrinsic value (eg the difference between the market price and the $156 strike price) but there is also a few dollars of time value.

If the price stay exactly where it is now till expiry frog would get about $1.20 back.

 

[Sharkman]

And did i mention the fees/brokerage....
I have given up on options in the asx market .

You're not using IB? In IB that trade would've cost $2.50 of brokerage, and that's only because of the minimum, above the minimum it would be 61.6c per contract (including GST) as CBA counts as tier 5.

 

[qldfrog]

You're not using IB? In IB that trade would've cost $2.50 of brokerage, and that's only because of the minimum, above the minimum it would be 61.6c per contract (including GST) as CBA counts as tier 5.

I use bell direct, nearly $50 fees for $1.5k purchase...
I had trouble with IB setup when i tried to open the account and in the total absence of support at the time, i cross them out.
Not an option i will ever trust..i know, plenty of happy users here.
I also use Saxo $3.3 brokerage, etc , good interface but had a scary platform glitch still unexplained or acknowledge, and deactivated options trading there as a result.
Tasty trade for US options but they do not do asx.

 

[qldfrog]

Apologies for the distraction, let's go back to CBA : closing

A PE above 27 and a div yield of 3%

 

[Value Collector]

Obviously, there is an insurance premium, so even with SP at $149/$150 the option will still have some extra value , decreasing until expiry

I think you are right in your belief that CBA is over valued, they only part in your strategy that worries me a bit, is that you are paying out money while you wait for that price to correct. Prices can stay out of wack for long periods sometimes. So I prefer positions where I get paid to wait for corrections, rather than me paying to wait.

This Leads me to focus more on selling options on under valued shares, rather than buying options on over valued ones.