Suncor Energy Inc. T.SU

Predicting closing prices on Option Expiration Days

[Obscure1]

Migraine

Thanks for your input into the world of option trading.  It has certainly opened up a new perspective on the ongoing tug-of-war of stock movements for me.

Your posts about the SU option information for February indicate to me that there is a good chance that SU will close on Friday Feb 18th at or very close to US$28.00.  Am I reading this correctly?

Given the significant imbalance in the outstanding "in the money" call/put options for March, what would be your best guess for the US$ share price of SU on March 18? 

I know it is too early to have confidence in picking a number, but when you study the option chain for March, I assume that a sophisticated option trader can get a feel for what is possible in terms of guiding the price towards a "doable" as opposed to a "maximum pain" strike price (in the absence of uncontrollable external events) that will minimize the pain for the option writers without calling in too many favours or waking the wolves.

[MigraineCall]

Yes, Obscure, you read that right. Max Pain Feb 18 is $USD 28, not far from where we are now, so a neutral bias. March is a quarterly expiry, and at $USD19 as Max Pain. https://maximum-pain.com/options Why the big difference you might ask? It is largely due to when the date it goes on sale. If you look far enough ahead on the chains, you can only buy quarterly expiry option dates that far in

[Clemxb7]

Shorting SU all the way down to USD $19 would seem a large undertaking especially with Suncor themselves placing buy orders after February 10. That said the markets are fond of surprising you. Suncor does often sell off fairly hard for not always clear reasons.  Do you think, on the other hand, this situation creates a scenario where a gamma squeeze may instead take place? I am hearing some

[MigraineCall]

Yes Clem, it would be quite a large and expensive undertaking. When someone buys a call option, the counterparties don't take risk, so they buy the stock. When expiry comes, they must be in a position to give the stock to the option holder, and they keep the premium. So yes, they have the ammunition to short, but it is risky to use. Borrowing more to short for the operation is risky. However

[quesea]

Max Pain : March USA $19 calls.  max pain for who ? Kinda looks like SU @ $33+ by March just might create a MAX PAIN for the big boys.  Maybe they're the people pushing for peace with IRAN.  ps: I did enjoy/relate to the Options explanation. kc

[quesea]

HF, Just checking out Options @ Exxon, Chevron, etc ... $120 oil, doubling again of their share prices.  There just might be a lot of Max Pain : Bankruptcies !! ya gotta wonder how many of those BIG SOB's are pleading with V. Poopin not to invade ? And how many are hoping & hopping he does !! Maybe like the Texas Governor, whose gotta be a secret Biden/Putin fan.  kc

[mrbb]

the world arena is now a war casino, people have bets on both side for the war and potential russia pull out. It sure make sports betting look rather small in scale. Stock market and foreign exchange are the biggest casino. 

[Experienced]

Your comments are correct. The sad thing is that all of this is manipulation by The Street.  The first salvo is what we saw WRT oil prices on Friday.  What is going is nothing short of mathematical game theory.  Migraine IMHO was wise to take some profits on half of his options positions. The reality of whether Russia invades or not is the following... 1....on the energy front

[mrbb]

practically everything is manipulated and the house wins 99% of time

[w8asec]

remember, if many of these calls were sold months to a year ago and they are covered at a lower price say $18.00 and the owner averaged up as smart Pro's do ,,,and /or have puts to cover,,,, then there isn't as much pain as people perceive.

[MigraineCall]

Yes. The counterparties do not lose money, have the options they sold already covered. They don't take risks. However, one must realize that due to the lopsided call bias just sticking out there for all to see, it presents a significant additional cash opportunity if they are able to easily smash the price down at expiry. It is sitting there like low hanging fruit, ripe for the picking.