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Strategies & Market Trends : Giant LEAPs...
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To: Sonki who wrote (151)5/19/1997 12:21:00 AM
From: JBird77777   of 315
 
What if the company on which you buy leaps is acquired, and you are holding leaps that are far from expiration? Does this effectively accelerate the expiration date of your leap to the date of the acquisition?

If so, this seems a huge risk of investing in any option, but especially leaps, where the price of the leap includes a substantial premium for time. The worst case of course would be buying a leap that is out of the money and having the company sold at a price below the strike price, but it would be a disadvantage regardless of the strike price, unless a premium in the acquisition price were to exceed the time premium in the option.

This is probably not a real risk for a company as large as Intel, but it could be a problem with a Biogen or even as large as a Cisco (which Intel could afford to buy).
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