Selling calls on cards

[conor912]

Originally Posted by D. Bergin

No according to the pictures the winner has the right to allow him to buy the card for $425 + the $266 bid. So $691.

It's convoluted nonsense.

Especially when the card can be readily had for $550. Something doesn’t add up here.

[D. Bergin]

Originally Posted by conor912

Especially when the card can be readily had for $550. Something doesn’t add up here.

I really don't think some those bidders realized what they were bidding on......if they are even real bidders.

[MooseDog]

I know the SEC has been de-nutted for quite some time but I would think this type of thing violates some US Securities laws, not that anyone pays any attention any more...

[iwantitiwinit]

I would agree about the SEC, what transpired is essentially a financial transaction exchanged for a promise to perform, really a non-registered security transaction. Doubt it will fly.

[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.

[swarmee]

I think the buyer should buy the call, buy the card, then file an "Item not received" on the original purchase of the call. That would put an end to these shenanigans pretty quickly.

[iwantitiwinit]

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.

No way eBay is going to police that, I can't see them holding the funds in lieu of a later action. Option pricing isn't the issue it's the satisfaction of a promise to perform in the future. I just don't see it.

[D. Bergin]

Ebay can't even police retractions. Imagine them trying to police this nonsense.

[griffon512]

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.

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.

[sando69]

just this morning i was thinking that what our hobby really needs is some serious "wall st" influence!
what a great idea...