Tim Worstall (guest) meinte am 30. Jul, 12:33:
Puts?
Err, forgive me for being very dim here, but why would puts be a useful purchase? If the deal goes through then the $45 put is valueless (I have got this right, haven't I? A put allows you to "sell" at a pre determined price?)Or are you saying that those buying the $45 puts are those gambling that it doesn't go through?
Eric Falkenstein antwortete am 31. Jul, 06:35:
yeah, that wasn't clear. I'm assuming half the market is bearish on the deal, half bullish (ie, relative to the probabilities). Your average day trader is attracted to a deal that pays 10 and risks 5 rather than vice versa, so the bears are eating up the puts--they are ignoring the probabilities.
