Pin Follow-up

• Posted by Adam Warner
• on November 19th, 2009

So how do those early pin thoughts look now? After all, this was all of yesterday.

Well in BIDU, it couldn’t shake 440 on Tuesday. And as we noted, there was no options reason for that, the open interest was just not there. And lo and behold, neither is the stock any more. It’s a good example of coincidence more than anything. The stock was just doing nothing on Tuesday, but it happened to be doing nothing right near a strike price. It may very pin somewhere, but looks like a different strike now and perhaps pinning is a misnomer as a better description is that it’s just moving slowly. Nov. 420 calls have an open interest of 1723, that’s literally a non-factor (BIDU stock has traded more than that 10 minutes into the day).

RIMM? Well now we’re on the other side of 60. Still might pin there, but ….this name’s just really boring these days.The calls are already in the 30 cent range, so it may be akin to throwing a Pin Party and having no one show up.

AMZN? Similar to RIMM now that it’s below the 130 strike, though the premiums are more respectable and just seems more interesting when it’s an “up” stock for the most part.

And finally AAPL. That 210 line never got in play, which highlights another point. Markets move, you really never want to just play for a pin too early because you see some open interest. It’s a relatively minor force on the margins. Now that we’re closer, it’s the 200 line that’s nearby. It has the added advantage that AAPL has traded in this vicinity for some chunk of the cycle, so the options have been very much in play. The open interest is 32,525 in the calls and 23,615 in the puts, so we do have to take this one seriously.

Just to clarify also, I’m throwing these out there for info purposes, not EVER recomending going short straddles and crossing your fingers. If I ever do a specific pin play, I orten wait until Friday anyway and I’m very disciplined about stopping out.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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