Ray Wollney

Using Options To 'Strangle' Apple, Research in Motion

He's not buying a straddle, he's buying a strangle. To be precise he's buying the Aug. 140 call and the

Aug. 130 put. However, John, you are precisely correct when you say the options from a theoretical

standpoint are overpriced.


The implied volatility on the strangle is approximately .55 when the historical volatility is much less.

Probably around .35 or so. Therefore the odds are in fact stacked against him. The strangle is probably

a sale not a buy. However strange things do happen and even though it's a bad bet he could get lucky.

Ray Wollney
optionspros.com

How Steve Jobs Lost Over $4 Billion

Bruce,

Thank you very much for your comment.

Ray Wollney

How Steve Jobs Lost Over $4 Billion

Thank you all for your comments. I had no idea my article would stir up so much passion. I would like to say that my article in no way is attacking Mr. Jobs or his ability to run his company. I'm sure he is a top notch CEO.
However if he had not made the decision that he made and exchanged the ESOs for the restricted stock he would have made well over 5 billion at this time instead of just over 1 billion. It turns out that he possibly was a better CEO than he even thought. He obviously had no idea the stock would soar the way it has. If he had it certainly seems to me that he would not have made the trade.
I don't think he ever dreamed that the post split ESOs exercisable at 21.80 would ever be "in the money".
Certainly not a 100 points "in the money" which at one time today they would have been. So whether he needs the money or wants the money is irrelevant to the fact that this is the most expensive options trade ever made.
Ray Wollney