Quote:
Originally Posted by oldjudge
The winner is just buying a call, exercisable by 9/14, to buy the card for $425. The strike could have been anywhere, where the higher the strike, the lower the value of the call. Option values are dependent on the strike (how it relates to current value, the time till expiration(more time—more valuable) and the price volatility of the underlying asset. The only issue I see is one of performance. If I ran Ebay I would say that these deals are fine, but the premium is held by eBay until either the option is exercised and the card is delivered or the option expires worthless. That way there is no risk of a seller taking the premium and disappearing.
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part of the issue -- especially in modern day cards -- is buyers exploit the market by using 30-day seller return policies as a free call option. all sorts of price manipulation on comparable card sales happens in those 30-days, often leading to the perception that the card has risen dramatically in price. people buy into the idea that these revalued card prices are real and it becomes a self-fulfilling prophecy.