The following is the OptionBT sighting of    "New Issue".
Go to Description Section
Title   :   "New Issue"
Position Description   :
     Position taken   :     December 23,2003
     Two Years out,
     Vertical Bull Call Spread for Debit,
     Long the 05 Dec 1150 Calls and Short the 05 Dec 1400 Calls,
     No Margin required,
     Long Calls out of the money by 54 points on Close (Dec 23,2003).
     Expiration/Settlement    :    Dec 16,2005 / Settlement = 1274.84

Count   :                           250 pairs

Credit or (Debit)   :            ($1,540,000)

Margin   :                          None required, the Long Call Strike < Short Call Strike.

Results   :                          Net => Long Calls @SPX = 1274.84 settlement = $12,484 each
                                        $12,484.00 * 250 = $3.121M less cost of $1.540M ,
                                        Net :     $1.581M

Comments   :   "New Issue"
  This bigfoot falls in the "indicator of things to come" group. It is not the size that it significant but when this sighting occurs that is worthy of note. These 05Dec options have just become available for trading. "NI" is jumping in at the first opportunity. This early bird who is first at the box office window has made a significant commitment of $1.5M. The spread is 250 points which means that "NI" wants to leave plenty of upside room before chopping off his profit.

Only twice a year in June and December will there be a "New Issue" which has an expiration which is two years out. This is an opportunity to view the long term thinkers. "NI" is not ambivalent in this regard. For him the long term outlook for higher SPX prices is positive and he is willing to take a large position. No hedging the bet here.

Let's hope this 23 December 2003 trade brings "NI" a nice December 2005 present.

Update_1 : As of COB, 11-February-2004, at current value, "NI" is $500k ahead.
Update_2 : As of COB, 08-April-2004, at current value, "NI" is $460k ahead.
Update_3 : As of COB, 22-October-2004, at current value, "NI" is $407,500 in the hole.

End Game:
Given that this position was out of the money at the beginning, it is a wonder that "NI" would have held out to settlement. But let us assume that he did. Even though the position never generated its full potential (SPX > 1400), the results were very good. The $1.581M net was more that 100% of the $1.540M that the position cost. Waiting two years to double up is only within the ability of the few. The more important point is that the long / short bull vertical spreads really do make sense.
Half a pie in this case was equal to another whole pie.


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