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Technology Stocks : Dell Technologies Inc.

DELL 127.87

+1.0%

12:13 PM EST

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To: GVTucker who wrote (165572)	5/24/2001 6:28:39 PM
From: stubba	Read Replies (1) of 176387

GVTucker - I find it difficult to believe that GS would have left those option positions unhedged for any amount of time without covering. I agree their primary objective in these type of deals was to take in money thru fee or commission and immediately turn around and lock in very small gain by fully hedging position. Like you, I would not think that GS would have been betting on Dell's price movement especially when you consider how bad they would have been killed on the earlier share buybacks. The synthetic long positions sounds more likely in my opinion but it would represent some pretty significant open interest. Since Dell does not provide details on when the contracts mature it is a little difficult to gauge. I believe the net share settlement would allow Dell the option of not having to buy back shares thru the put obligation but rather issue more shares that would cover the diff between strike and current mkt. This would certainly be a very bad sign if Dell chose this option but I firmly believe the language was only used to avoid balance sheet recognition on the put liability.

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