I'm not an options expert by any means so I am hoping this sub can expand on a recent discovery. I have found a stock where the underlying options are at times lowed than FMV, to clarify I am not confusing the strike price or any other novice concept (at least I don't believe). See the example below:
XYZ Stock is trading at $5 per share
CALL XYZ 1.0 EXP 12-31-2025 is priced at $3.99
While the volume is low, much lower than the accurately priced calls, there is still volume. I picked up some calls today at the theoretical $3.99. So my breakeven was $4.99 on a stock that was priced $5 at the time.
Can anyone explain what is happening with XYZ options? Strangely, the calls at a premium have significant volume e.g. CALL XYZ 4.0 EXP 12-31-2025 is priced at $1.50, thus having a $5.50 breakeven.
(I've posted to Thetagang but posted here as Stocks receives more traffic and thus I have a better chance at finding an answer)
