CML 4.35% 2.2¢ chase mining corporation limited

Has Solly Got Synthetic Shorts?

  1. 328 Posts.
    Hi all,

    Reported in the SMH "Bond Street" 21 Oct, suspected activities of Mr Lew and companies early last week.

    Purchase 18 million CML shares @ $6.35

    Purchase 18,000 CMLVQ $9.00 PUT OPTION EXPIRING 19-Dec-2002 at $2.69

    Sell 18,000 CMLTQ $9.00 CALL OPTION EXPIRING 19-Dec-2002 at $0.01

    Long stock at $6.35 and a synthetic short position at $6.30. What is the anonym of arbitrage? Someone seems to have paid $0.05 (not including funding costs) per share to temporarily boost shareholding. The loss has been locked in.

    Obviously no intention of retaining stock because, if CML finishes above $9.00 the calls will be exercised and our call writer will be obliged to sell. More likely CML will finish below $9.00 and our put taker (supposedly the same entity as the call writer) will exercise the options and sell the shares. Whatever CML's price the shares will be sold.

    GK



 
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