No need to be concerned about the arbitrage situation...
There is a perfectly rational explanation.
The sahre price of any issue, at any point in time is a product of many influences, value is but one.
The options are lagging the heads for the simple reason there are many holders of the options only in for profits...and not conversion...as such, they are on the edges of their seats looking to sell at every opportunity.
Only need a few doing this and a kind of "I will accept less than you" scenario develops, where sellers jostle to be the one at the top of the sell-queue.
This is partially driven by fear from those who simply cannot afford to convert their options...so must sell...and partially driven by those who can see this scenario and realisee the value of showing patience, which is typically what "investors" do!
So...we have the selling pressure from "traders" versus the buying interests of "investors"...one group typically impatient and the other in no hurry!
In such a scenario, you will always find the price weighted to the more patient side.
Perhaps the most interesting part here is that many who saw the value in selling heads to swap to options (in order to take advantage of the arbitrage situation), already have done so...secondly, the expected retrace typical of such a run just doesn't want to happen, so those waiting are gradually lifting their expectations, further, most holding heads from even just last week are so far in profit, even "traders" are gradually becoming investors as the building margins on their buy-in prices incease.
All of which leads me to believe the temporary influence of the options "equation" on the stock, be it via arbitrage trading or indeed, just plain selling out of heads to pay for oppies conversion, is no longer a factor.
I think the market is slowly realising this now.
Finally, there is a certain smell of "hold onto your positions" here...perhaps indicative of an announcement of some kind near term...or indeed, corporate activity not yet widely known?
Cheers!
MPO Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
