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Strategies & Market Trends : Options
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To: SecularBull who wrote (1306)1/19/2000 1:51:00 PM
From: Bridge Player  Read Replies (1) of 8096
 
<< Exercising options on JDSU, WCII, and ICIX to raise equity vs. options ratio. No reduction in margin. >>

In fact, would not this process increase margin debt by the amount of the purchase price of the stocks?

I can understand how you would improve your equity/options ratio, but do not quite understand how overall risk is reduced. If the stocks thus acquired go down in value, would not your overall account value go down (roughly) the same amount as if you still held the options instead?

Perhaps I am simply not understanding your meaning here.

BP
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