Intel Strategy for Achieving Wealth and Off Topic Message Board

STOCKTALK

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 : Intel Strategy for Achieving Wealth and Off Topic

INTC 36.78

+2.7%

Nov 26 3:59 PM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Sonny McWilliams who wrote (24151)	8/2/1999 9:56:00 PM
From: Brian Malloy	Read Replies (1) of 27012

To Sonny and rest of thread an interesting play that I have heard. A little while back we were discussing buying ATT. I have basically decided to pass on that as I think better growth is available through WCOM and some other issues in this area. However, with the market going through its current gyrations I do see an opportunity thanks to arbitrage to make a fairly safe 15-18% in the next four to six months. If you annualize that out it comes to 30-36% and 45-56% respectively which is not too shabby. Currently T has agreed to buy buy out Media One Group (UMG) for $85. $30.85 Cash + .95 shares of T for every share of UMG owned. If T shares should drop then the cash amount will increase to something in the $36-38 range to compensate. I think this deal will be approved by the feds between Nov and Jan of this year. You can pick up UMG for ~$73 dollars. You can then wait for it to rise to about the $75-76 level and sell the Jan 2000 covered call @85 and pocket around $200 for each contract. Depending on the collar amount, T can be as low as $49.47-51.36 and you capture the full amount of profit (15-18%) that I first listed. In short, I think it is unlikely for the deal to be called off so the only way to lose money is to have T close at less than $39 dollars and if you sell the covered call at $2 you can lower this to $36.95 The cutoff of a worse case scenario Guaranteed cash value + (T stock price x .95) = current UMG stock price. $36 + (38.95x.95) = $73 T closed today at 51 1/2. Thus in terms of risk reward ratios this is a pretty decent conservative play and somewhat "safe" return given the type of market we will likely deal with through the end of the year. Regards and run other numbers and scenarios for yourself. PS, I have started accumulating shares of of UMG.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next