During the past 10 days, in fact, speculators on the ISE, CBOE, and PHLX have bought to open 22.90 puts for every call on the shares, marking a near annual-high pace of put buying relative to calls.
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If an individual investor likes the long-term outlook of Dell Computer or Cisco Systems, it's easy to purchase a "call" on those shares, which gives the investor the right to buy them at a set price in the future.
"If you write a call on your IBM shares, you reduce both risk and potential return, one for one, " says Bob Whaley, a Vanderbilt University professor who in 1993 developed the Chicago Board Options Exchange Market Volatility Index, or VIX, which tracks investor expectations for market volatility.
If the fund has acquired the correct amount of physical shares or deriavtive products on the shares, say put and call options, then a series of spot and forward dated strategies can be adopted.
Vivendi Universal is a good example: Thomson First Call shows 14 analysts keeping tabs on the shares traded in Paris, but only one analyst tracking the U.S.-traded Vivendi ADR.
Investors anticipating continued appreciation in the price of the underlying shares purchased longer-dated call options on the stock.
Fresh interest in upside call options on Pepsi indicates some traders are positioning for shares in the name to extend gains this year.
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Should MSFT shares rally, losses on the sold call could be substantial, as there is no cap to how high the stock can go.
Aside from betting on a rally in the underlying shares, call options can also be used to protect short positions in the stock.
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Call selling at this strike may represent a near-term ceiling on shares in LVS for some investors.
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Atlantic Equities analyst James Cordwell says he is advising clients to hold on to Apple shares until more information emerges from the earnings call tomorrow.
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And on this basis, we believe the case for owning ATVI shares rests on upside potential from its online initiatives such as Call of Duty Online.
Call sellers at these strikes keep the premium received on the transaction as long as shares fail to rebound above the strike prices described through August expiration.
The Grimm statistic also does not include what you might call partial LBOs like Unocoal's in which corporations pile on debt to buy their own shares.
Using gold mines as an example, he said when you buy shares in the company, you also receive a free, long-term call option on gold.
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DardenIII, 73, reportedly learned of the information from a long-time friend who served on the board of directors at AirTran, subsequently making large purchases of common shares and call options within days of the merger announcement.
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Huge prints in January 2013 contract call options on the media company within 30 minutes of the opening bell today suggests one big player sees shares in News Corp. not only recovering over the next year and a half, but also possibly rising to their highest since 2000.
Isaacson reasons the terms of the loans made them "nonrecourse" (meaning the employee's other assets weren't at risk) and that 1971 IRSregs on nonrecourse loans mean the shares shouldn't have been valued and taxed until the margin call, when they were worth less.
Mr. Blankenship said on the conference call that Verde is recommending the buyout, partly because some investors have wanted a way to sell shares.
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