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Biotech / Medical : SABRATEK CORP (SBTK)
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To: mod who wrote (327)7/14/1999 12:26:00 PM
From: R.E.B.  Read Replies (1) of 487
 
Hi mod, I've just started researching SBTK for an options position myself. My spin on your questions is this.. The "in the money" July calls are not likely short positions since a short position in a naked call would likely be so far out of the money as to all but eliminate the triggering of a "call".... the money is then used to buy "out of the money puts."

The large put position could very well represent a hedge against bad news for those holding the stock long. If they still want the protection, they will simply take another stake in Aug or Sep PUTS when the July's expire worthless.

As for the option MMs, my take is they own SBTK long and wrote calls against their holdings, they would do it again after they expire worthless. If they own the stock long and the in-the-money calls, I would think they would peddle the contracts now while they still have a premium and take another postion for Aug.

The best strategy as I see it is to buy SBTK long and write the out of the money calls say $5 out thereby instantly giving you a 15% return on investment. If the stock goes up and exceeds the call price, great, you get $5 more, if not, repeat the above.

Just as good is to buy way out of the money puts say 3 months out. If the stock tanks on "bad news" it will tank big time. Very little money can be wagered on this to control a lot of shares without the risk of actually going short.

R.E.B.
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