How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 482.01

+0.2%

9:38 AM EST

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To: t2 who wrote (27236)	7/24/1999 12:34:00 PM
From: John F. Dowd	Read Replies (2) of 74651

t2k:"Another thing to remember is that MSFT sells equity put warrants on its stock. If the stock corrects enough, they could sell these for a good profit. The more it corrects, the more they get from these sales." Actually when you write naked puts you have to be prepared to buy the stock if put to you. Suppose they write puts at 75 and receive the premium they are money ahead. But if the stock goes to 75 they have to buy them back which is ok as they can buy the stock back as part of stock buy back. If it goes to 60 they lose big time as they have to buy a $60 stock for $75. So they do not want it to go too low depending on where they wrote the puts. JFD

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