Hi Carl,
*** More off topic option discussion ***
I don't know off hand what the details are of those options, but here is a quick analysis of two plays. A while back VNLAJ (then 150 Jan 99 calls) was trading at around $30. At the same time, INTC was about $140 or so. Thus, imagine spending $21,000:
Buy 7 contracts VNLAJ at $30.
Borrow $21k, buy 300 shares INTC on margin.
Now, VNLAJ is effectively worth $64 (now actually 2 contracts of VNLAO, post split), while the stock is worth $194.
Sell 7 contracts VNLAJ, gives $44800.
Sell 300 shares for $58200, return the $21k margin, leaving $37200
Thus, with these options, I'm better off with the option rather than margined stock. There are many other considerations, of course, but you can justify the LEAPS in some cases after all...
Richard |
