Options

WalterMitty

Where can u buy options for individual Irish shares and what is cost of such options.

dunkamania

i dont believe there is an options market for iseq listed companies

woodseb

there are some US listed options available on the ADR lines of the two banks and Elan but nothing much more than that - not sure how you would go about trading them as a retail investor

WalterMitty

or can i buy insurance against soverign default cds swaps for ireland?

woodseb

WalterMitty wrote: »

or can i buy insurance against soverign default cds swaps for ireland?

buying a CDS is like buying insurance against default, you don't buy insurance against CDS

CDS are generally traded in large sizes over the counter so its not really for the individual investor

If you are looking to profit from Ireland going down the toilet you buy some puts on AIB, for example a $1 strike, Feb 2011 put on the adr of AIB (trading at $2.20) would cost you around $0.15

dunkamania

forgot about options on adr's

There are cds retail brokers, not sure if they cover sovereigns

woodseb

dunkamania wrote: »

forgot about options on adr's

There are cds retail brokers, not sure if they cover sovereigns

you should have remembered that dunk;)

WalterMitty

Anyone got a link to see what bank of Ireland futures are trading at in either NY or London? Would u buy such options/futures through a standard stockbroker?

woodseb

WalterMitty wrote: »

Anyone got a link to see what bank of Ireland futures are trading at in either NY or London? Would u buy such options/futures through a standard stockbroker?

http://www.eurexchange.com/trading/products/EQU/FUT/country/IE/BIRF_en.html

trades in germany, would reckon most brokers could sell these though there doesn't seem to be any volume trading in them so might be hard to get a price

NewGrad

Hi,

Re the AIB ADR option example:
If you are looking to profit from Ireland going down the toilet you buy some puts on AIB, for example a $1 strike, Feb 2011 put on the adr of AIB (trading at $2.20) would cost you around $0.15

If (for arguments sake) AIB was nationalized and the shareholders share value wiped out, is the put option now worthless?

/NG

woodseb

NewGrad wrote: »

Hi,

Re the AIB ADR option example:
If you are looking to profit from Ireland going down the toilet you buy some puts on AIB, for example a $1 strike, Feb 2011 put on the adr of AIB (trading at $2.20) would cost you around $0.15

If (for arguments sake) AIB was nationalized and the shareholders share value wiped out, is the put option now worthless?

/NG

If you hold a put option on a stock you have the right to sell the stock at the strike price to your counterparty

So if AIB is nationalised and the shares worthless you can buy the shares at close to zero and you can sell it on for $1 - so the option is very valuable - equally you could just sell the Put that you bought at 0.15 for what would be a higher price as the stock faces nationalisation

NewGrad

Hi woodseb,
thanks for the reply.

As the share price falls, I can see how the put would be valuable.

I am wondering what happens in the case of a sudden nationalization:
If the government nationalized the bank overnight and suspended trading in the shares, do the options still trade? Or are they suspended too?

Just wondering about the actual process of trading out of the position in the event of nationalization.

/NG.

woodseb

NewGrad wrote: »

Hi woodseb,
thanks for the reply.

As the share price falls, I can see how the put would be valuable.

I am wondering what happens in the case of a sudden nationalization:
If the government nationalized the bank overnight and suspended trading in the shares, do the options still trade? Or are they suspended too?

Just wondering about the actual process of trading out of the position in the event of nationalization.

/NG.

i see what you mean - generally the options exchanges will set a price at which all contracts settle so you won't lose out as an option holder. I not fully up on all these settlement issues though

OfflerCrocGod

Ireland will not default, no more then Greece has, if that's what you are hoping for you will lose the bet I'm afraid.