SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : Creative Labs (CREAF)
CREAF 0.448-12.1%Dec 17 12:59 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: g.w. barnard who wrote (9196)1/30/1998 3:57:00 PM
From: Burton Waxman   of 13925
 
HI GW: I don't mind your input at all. The comparison of the two cases (CREAF and CUBE) were not exactly the same however. If your CUBE were to fall to 10-12 you would be sitting with a large loss on your long position and your short position would also be vulnerable to having the shares placed to you at a premium. The strategy I was expounding however, was not to place yourself in any great risk. By selling the July 17.5 puts at 3.75 the basis our your cost is less than 14. At the same time the interest on the entire 17.5 in your money market account is another 1/2 point, bringing the total cost basis to about 13. If the stock does drop to about 12 you've lost 1 point or about 7.7% versus a 25% gain if the stock were not to move at all. If the stock were to drop to the 12 level however, you could still rebuy the puts and sell puts at 12 recouping the lost point and then some. Remember, the 17.5 value that you have contains 3.75 of their value. On the upside, calls will rise with a rising stock, forcing you to repurchase at a higher level if you want to remain long; however with selling puts the value of the put decreases with a rising stock letting you recoup your profits in a shorter time frame. Best of Luck. BURT
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News