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Twitter, Inc. (TWTR) Option Chain - Stock Puts & Calls - isycihe.web.fc2.com

Discussion in ' Options ' started by alephnine , Feb 23, Log in or Sign up. As of now, TWTR stock price is Mar PUT options with strike 19 are currently at 3.

Even the intrinsic value of this option right now is 3. How can the bid be BELOW intrinsic value? They are valuing the puts at about parity, thus to make money a market maker would have to buy them slightly below parity.

Frank Denneman

Are there good reasons why a put valuation is at "parity"? Yes, when the put is deep enough in the money. If you buy the stock and the put for parity, you are synthetically buying the same strike call for zero, plus the cost to carry the stock to expiration and commissions.

Here the 19 call is only trading for. The stock still looks confusing and leads to nowhere.

Now it is a bad idea to expect from it something grand. People underestimate the cost of slippage when trading. This spread is much larger when you have a bigger order to fill. A deep in the money put has a delta close to 1 or equivalent move to the stock so there will not be any extrinsic value for the put to sell as the market maker will use the stock for hedging.

The option valuation models cant calculate deep in the money options properly and thus you cant use them to compute an implied volatility - it wont work I have had good success buying these options and using the stock to get out for a profit later when being directional and going out about six months There are suggestions that Snap will turn out to be much stronger after IPO. Looks like it can overshadow Twitter.

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