This stock has been very resilient (dropping 2.3% over the last 3 days) despite the recent
flood of bad news about the mortgage market versus say CFC that has declined 9.1% over the
last 3 days... I think this is a very good sign. I would expect a runup before the
dividend as well. i'm not sure if you'd have to exercise the day before the ex-date or
not.

I think there is definitely some risk here... does everyone else know something we don't
its kinda scary... why 35% short interest??? now that was on March 12th and there may have
been some short covering since (it was at $24.75 then).

I have invested in this, but I will be watching insider trading activity closely... if
there are any major insider selloffs I will be closing out on this.

Other than that, I don't see anything wrong with this stock... it seems like a pure value
play at P/E of 5.4 and PEG of 0.85 vs. CFC P/E of around 8... I also definitely see a
short term runup in the stock and hold $25 and $30 call options in addition to my
holding...

As far as buying $30 call options now... I might be more inclined to go with the safer $25
at this point.

Good luck! Dean.

I am considering building a APR $30 call position on AHM, ex Div date 4/7 and 35% of
shares short i expect the stock to run on the couple of dates before the ex div date, any
thoughts on this strategy?

1. Of course.
2. If they don't exercise an in-the-money option they're stupid.
3. I suppose that it's possible to agree to settle by simply receiving the net payout
from the option writer without the extraneous buy/sell transactions. In that case, there
should be no effect on the trading price.

CAN ANYONE PLEASE CONFIRM THIS FOR ME OR GIVE ME A CLEAR AND CONCISE REASONING AS TO WHY
IT IS NOT TRUE...
Everyone has lost sight of what i'm trying to find out here...

GIVEN A STOCK WHERE SAY THERE ARE ONLY 1000 CALLS "IN THE MONEY" AND 5000 PUTS "IN THE
MONEY" AT THE OPTIONS EXPIRY DATE, HOW WILL THIS PRESSURE THE STOCK?????? WILL THE PEOPLE
THAT EXERCISE THE PUTS AT EXPIRY NOT DRIVE THE STOCK UP BECAUSE THEY ARE BUYING STOCK IN
ORDER TO SELL IT FOR THE PREMIUM???

1. Yes, I know it is easier to sell the put option before expiry
2. I don't care how many people sell the option before expiry, at the expiration, someone
is stuck with the option (whoever the last person sold it to) and they will exercise it
if it is "in the money" will they not???
3. I do not hold any options, just the stock and I am wondering how a stock in the above
situation will be pressured due to this expiry

Are there any professional traders / investors in here????

Thanks for all your input! :)

Call options are in the money if the strike price is below the market price of the
underlying; put options are in the money if the strike price is above the market price of
the underlying. The other two conditions are "at the money" and "out of the money"; it's
not difficult to work out the details.

Derek: Nobody is forced to exercise an option; that's why it's called an "option":
exercising it is optional. If you have an option to buy (a "call") at $35 and the stock
is trading at $32, you'd be stupid to exercise it. If you have an option to sell (a
"put") at $30 and the stock is trading at $32, you'd be stupid to exercise it.

However, should the option holder choose to exercise the option, the option writer is
obligated to complete the transaction. If you hold a call at $30 and the stock trades at
$32, you'll exercise the option and buy at $30; the writer of the option must sell to you
at $30. If you hold a put at $35 and the stock trades at $32, you'll exercise the option
and sell at $35; the writer of the option must buy from you at $35.

an "in the money" option doesn't mean YOU made money through the purchase, it just means
the option has some value to it at expiry

Last edited on: 03-15-2007 10:15 pm

First... "In the money" means the stock is below the exercise price... so regardless of
what you paid for it, if the stock sits less than the $35 exercise price for a put, you
are "in the money".

Second... I don't own any puts, i'm not asking what I would do with a put... as I said,
i've owned options before and always sold them before expiry - yes this is the easiest
thing to do... but what about the guy I sold them to?... in the end someone is stuck with
the hot potato and they will exercise the option if its "in the money" as explained
above.

So when you say "lower). So if your puts entitled you to sell short 1000 shares at $35,
you could now buy them back to replace them at $25 for a $10,000.00 profit(less your
original cost to buy the puts)"

the buying to cover the shorts should drive the stock up right???

If the option is in the money, meaning you paid less than $10.00 for your put option
(assuming it's a $35 put and the stock is at $25), you can do one of 2 things; either sell
the put to someone else who will exercise it (the easiest thing to do), or exercise the
put, where you will be selling the stock short at $35 where for a profit, you would buy
the stock to cover your short (unless you think it's going lower). So if your puts
entitled you to sell short 1000 shares at $35, you could now buy them back to replace them
at $25 for a $10,000.00 profit(less your original cost to buy the puts). Your online
broker can help you with this, or again, it's just easier to sell your puts and receive
about the same amount of money.

my point is because the stock went down so much, there are much fewer call options that
are "in the money" than there are put options "in the money"

so if for example there are 1000 call options in the money and 5000 put options in the
money, if the 1000 calls offset 1000 puts, that leaves net 4000 put options to be
exercised, and i want to know how that will pressure the stock price.