Etec Systems moving up Message Board

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Technology Stocks : Etec Systems moving up

ETEC 0.150

0.0%

Sep 8 5:00 PM EST

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To: Bookdon who wrote (1277)	1/31/2000 1:52:00 PM
From: Q.	of 1279

I played the arbitrage today by shorting AMAT and buying an offsetting long position in ETEC, leaving me with $6 1/4 cash (per share of AMAT), net of trading costs. If the deal goes through as planned, I get to keep the $6 1/4. To insure against the deal collapsing, which is the scenario where I can lose money, I bought out-of-the money ETEC puts. I estimate this will reduce my downside by half, in case the deal fails and ETEC stock falls let's say 40 points from its present value, giving me a worst-case scenario of a loss around $20 per share of ETEC. I paid for the premium on the ETEC puts by writing covered out-of-the-money puts on AMAT.

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