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Technology Stocks : PALM - The rebirth of Palm Inc.
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To: Souze who wrote (1147)8/9/2000 10:23:09 AM
From: LLCF  Read Replies (1) of 6784
 
<Sorry, I don't follow that.>

The puts that traded were like the "70's"... if you buy the 70 put and buy the stock [that's what happened], you are effectively long the 70 call [graph this on paper to convince yourself]. There is clearly no reason to do this [the actual calls are worthless] EXCEPT it has become a common way for savy traders to get long stock. Why get long stock?? Because if you are trying to short the stock you can chase it down a long way before you get to sell any, there are rules for shorting, you can't just go in and bash the bid like you can if you're long the stock.

I'm surprised the stock isn't down a few bucks already, I think the up market has brought some buyers in. In any case, it's hard to know if this latest news is why the spread was put on or not.

DAK
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