Novell (NOVL) dirt cheap, good buy? Message Board

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Technology Stocks : Novell (NOVL) dirt cheap, good buy?

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To: Howard t Anderson who wrote (27710)	8/13/1999 8:16:00 PM
From: Paul Fiondella	Read Replies (1) of 42771

Some options questions Your 30 August 20 Calls bought at 3.75 translates into 3000 shares at a breakeven price of 23.75. The stock traded at 25 1/4 today and the option didn't trade. I would assume the option will be worth the value of the stock minus the strike price on next Friday plus or minus 1/16th. So this is a candidate for exercising and taking the stock. You have put the difference between 23.75 and what you sold the NOVL stock for in your pocket. Your 90 August 25's bought at $.50 translates into 9000 shares at a breakeven price of 25.50. The option was selling at 1 1/8th with a nice premium of 7/8ths over the stock price at the close of 25 1/4. Nice candidate to sell but when? See other postings on when to sell the 25's here. You have $1.50 gain on the 3000 by exercising the 20's and selling, and, a $.625 gain on 9000 by selling the 25 options which are trading heavily. If you sold the 20's you would get $4500 and if you sold the 25 options your profit is $5625 putting another $10125 in profit minus commissions into your pocket. That leaves you with no NOVL stock but even more money. On the other hand if you exercise the 20's and take the stock you've locked in a price of $23.75. So whether you exercise these shares or not and hold, the most likely ones in my opinion to exercise, depends on what you sold the stock for---a missing piece of information. The 25's are more problematic. It's a crap shoot. It makes sense to sell them but when? Do you have a strong feeling the stock will go up from here? How strong? Did you sell your stock for more than 25 1/2? You have to make your own decision as to what you want to do. -1- Exercise the 20's and sell, sell the 25 options (Maximizes Cash --- no stock, and then wait until after earnings and expiration and take your cash and buy in again.) -2- Exercise the 20 and the 25's --- all stock) pocket the difference between where you sold the stock and the new average of the buys. -3- Exercise the 20's take the stock sell the 25 options (half cash, half stock). -4- Take the chance and wait for a run up to earnings and reevaluate -5- Take a chance and hold out until earnings are announced and see if there is a pop. Still missing is your sale price. Thems the choices. Please run it by your broker and let us know what you decide.

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