Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 171.02

-1.5%

Dec 31 3:59 PM EST

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To: Jill who wrote (56513)	12/23/1999 6:27:00 PM
From: RoseCampion	Read Replies (2) of 152472

What is the advantage of your broker doing both at once? Jill, it's simple insurance. The advantage is that you are effectively "guaranteeing" the price you are going to do the roll for, by asking your broker to perform the two separate transactions simultaneously. It's the option spread equivaltent of a simple "buy limit" order on a stock purchase, specifying your maximum price to perform the transaction. The reason this is done is that there's no possibility that, between the time you sell your old options and buy your new ones that the price of the underlying equity will spike upwards and cost you additional dollars to get into your 'rolled' position. The alternative is to sell your old options and hope the price falls before you buy your new ones - clearly a more risky, though potentially more lucrative, bet. Or you could specify separate sell and buy limits on both sides (ie, a separate bid for the sale and ask for the purchase, rather than a total debit), taking the chance that one of these transactions will go and the other won't. More options posts follow. -Rose-

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