+- ShareholdersUnite Forums (http://shareholdersunite.com/mybb)
+-- Forum: Companies (http://shareholdersunite.com/mybb/forumdisplay.php?fid=1)
+--- Forum: InterOil Forum (http://shareholdersunite.com/mybb/forumdisplay.php?fid=4)
+--- Thread: If the Shorts are using options to hedge . . . the pps? (/showthread.php?tid=5055)
If the Shorts are using options to hedge . . . the pps? - Movieguy - 11-04-2013
There are some knowledgeable people on this board who have suggested strategies that the Shorts may be using to hedge their positions. My question is if they are, what will that do to the pps when a deal is announced? It would seem to me that if the Short has a long position through an option, might they be content to let the pps rise, even dramatically? I mean say the pps is $130 and they cover their short position as the price rises to $140. Their entire long option position would now be worth the most it has been and they would benifit even more if the pps continues to rise. My point is, could we Longs actually benefit by this short hedging strategy? Would we al be working together towards a hgher pps?
Input from those knowledgeable on these matters would be appreciated.
RE: If the Shorts are using options to hedge . . . the pps? - Optionray - 11-04-2013
'Movieguy' pid='30788' datel Wrote:There are some knowledgeable people on this board who have suggested strategies that the Shorts may be using to hedge their positions. My question is if they are, what will that do to the pps when a deal is announced? It would seem to me that if the Short has a long position through an option, might they be content to let the pps rise, even dramatically? I mean say the pps is $130 and they cover their short position as the price rises to $140. Their entire long option position would now be worth the most it has been and they would benifit even more if the pps continues to rise. My point is, could we Longs actually benefit by this short hedging strategy? Would we al be working together towards a hgher pps?
Input from those knowledgeable on these matters would be appreciated.
I think they are going to hit it both ways. They'll let it rise, sell their calls at a profit, then start shorting again, driving the price back down, eventually covering in the 80 range, where the stock will eventually base until the cash flow kicks in at which time the price will be back up. Hopefully, there will be a little surprise for them and when they start to short again - maybe this time though, there will be another announcement which will sinkem for good and the stock never returns to 80. ( My hope is a bidding war after the first announcement with xom)
RE: If the Shorts are using options to hedge . . . the pps? - jft310 - 11-04-2013
Stop it guys look at stock symbol LNG. Has risen from $1.75 to $39.00 and all they did was get permission to build an LNG plant and financing. Two years from any production.A multi year move I measured.
Want more examples look at Australian symbol OSH. Oil Search has risen from $1 to $9 with an LNG deal with Exxon. A multi year move.
Neither has LNG production today.
Learn this point. Mr Market anticipates. BUT to many false starts for IOC . BUT also the market has a SHORT MEMORY and IOC will deliver when Hession delivers.
Heres what Mr Market will get. IOC owns its assets at 5 cents and with an equity ownership in an LNG plant sells it for $15 range.
RE: If the Shorts are using options to hedge . . . the pps? - admin - 11-04-2013
Actually these scenarios could be complementary rather than mutually exclusive. We might see some short-term gyrations of the kind suggested by the first posters, but longer term, I have to go with JFT, depending on deal metrics, needless to say.
RE: If the Shorts are using options to hedge . . . the pps? - Rob Cos - 11-05-2013
[I suspect a takeover is coming - perhaps a bidding war - when Exxon runs all the numbers - it really makes more sense to take this company over....Now the question is will Shell and others let them have it without a bidding war. Longs patience will pay off over the short hedge fund offshore criminal manipulation.
RE: If the Shorts are using options to hedge . . . the pps? - Thylacine-2 - 11-05-2013
I expect Exxon to try and avoid the risks of a bidding war for IOC, including a high takeover price and/or losing IOC to a rival. Their infrastructure in PNG will allow them to bid competitively for access to IOC resources and projects. I expect them to try and structure outcomes of current negotiations to improve their competitive position for access to resources yet to be discovered.
RE: If the Shorts are using options to hedge . . . the pps? - Rob Cos - 11-05-2013
[quote='Thylacine-2' pid='30842' dateline='1383588505']
I expect Exxon to try and avoid the risks of a bidding war for IOC, including a high takeover price and/or losing IOC to a rival. Their infrastructure in PNG will allow them to bid competitively for access to IOC resources and projects. I expect them to try and structure outcomes of current negotiations to improve their competitive position for access to resources yet to be discovered.
[/quote
That may be what Exxon wants but Hession opened up the bidding and IOC board, Shell and others may not want that. Time will tell. I have been on board of directors on both sides....many times when a large deal is being proposed to a board...a wise board member will interject..."well if we are going to have to pay that much for this prized asset, how much more would we have to pay to get the whole company"...you can be sure Exxon board has asked that question.
RE: If the Shorts are using options to hedge . . . the pps? - trans - 11-05-2013
IMO, if XOM doesn't go for the whole pie, which I think is unlikely at present (very possible up the road a ways), XOM would be super smart to sweeten their deal with IOC to be able to front run others in exploiting the licenses. That would mean a sweeter deal from XOM than presently being tossed around by those speculating on low price. I suspect they may be surprised if my reasoning is correct. Trans
RE: If the Shorts are using options to hedge . . . the pps? - jft310 - 11-05-2013
If I were Exxon I would want an option to buy any additionally found NG.
RE: If the Shorts are using options to hedge . . . the pps? - Tusker - 11-05-2013
'jft310' pid='30884' datel Wrote:If I were Exxon I would want an option to buy any additionally found NG.
If I were Exxon, I would want an option to be the Stratigic Exporation Partner for PPL 236,237,238.
In the case, I am not already.
" border="0" class="smilie" src="images/smilies/cool.gif" />