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Technology Stocks : Cadence Design Systems

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To: Carl R. who wrote (492)	8/16/1999 1:03:00 AM
From: Thomas DeGagne	Read Replies (1) of 668

The consensus here is that CDN has an attractive valuation with little down side risk. When the stock price will rebound is unclear. I concur with this acessment. Downside should be limited due to the large stock buy back that CDN has announced. This is a key point. To me, this situation suggests selling puts. Volitility is 83 over the last 30 days. Premiums are relatively high. After a quick review of option prices, the Nov 10 Puts seem appealing. Should CDN drop to ~$9.5 a price of $1.50 for the puts should be attainable. This looks very good to me. A loss occurs only if CDN drops below $8.50. If this is used as the "investment", then this is a 17.6% return in approximately three months and a week. About 70% annualized! Comments please.

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