How To Write Covered Calls - An Ongoing Real Case Study! Message Board

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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!

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To: Chuck Molinary who wrote (1874)	4/25/1997 10:48:00 AM
From: Maureen	of 14162

RE: Ceph - Chuck, Jim and Kellis Chuck, Yep... I saw that was what was going on - Be sure to read through the Ceph thread. Jim and Kellis... There was a more detailed story there about the option deal... from Reuters or such... but this AM I see it is no longer there.. probably was a copyright violation and they removed it. It was much more informative than the other news available on net about it. Another article about it being a bullish move can be seen here... you have to register (Barrons) but it is free.. "Cephalon's Unique Options Bet seen as Bullish Sign" barrons.com To sum up this more detailed news.. Ceph is not buying these options on the market.. but rather doing it in a private deal with SBC Warburg Inc. The article point out that although some see this as bullish, some also see it as bearish... as a ''synthetic put'' option. As they are selling stock to get these calls, which is like buying a put option, betting that the stock will go down. Still others said that CEPH " still be making a bullish bet, but with fewer shares, making it less bullish than it appears." There is a comment that the amount the company makes is capped at $45 million and the most the company can lose is $10 million. The article also pointed out that the firm that sold the deal to Cephalon would most likely hedge its bet on the company's stock. "Since it has sold calls, it would need to buy back shares, buy calls or sell puts, meaning that the firm would be responsible for buying pressure in Cephalon, a bullish byproduct of the deal." Interesting... But I'm not touching it! Seems that these FDA approvals etc are good to use optin spreads on...?? Have you ever done this Jim? Maureen

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