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Technology Stocks : Micron Only Forum
MU 234.19-2.2%Dec 3 3:59 PM EST
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To: Skeeter Bug who wrote (52804)7/15/2001 10:50:15 AM
From: phbolton  Read Replies (1) of 53903
 
My guess is that most of the warrants went to folks who are hedging various positions. A Yahoo post, of all things,covered one of the ways to do this. Another is to use the warrants to hedge "forward sale" positions. Note that those who have hedged the warrants want the stock to plummet, at least once, in the near future.

$17 for a 2008 $56 call is reasonable given how widely MU can swing and the current pricing of long term options. The stock may have one, or even a few more upward spikes as the company spins down the drain.

messages.yahoo.com
On July 13th, there was a volume of 3000 on the MU Jan 2004 50 strike (LGYAJ) and a volume of 4891 on the MU Jan 2004 60 strike (LGYAL). The daily range of
LGYAJ was 10.70/12.40 and the daily range of LGYAL was 7.90/8.50.
I think it is obvious here that some players sold these calls and took the premium to buy the warrants. Pros wouldn't take this position unless they felt there was a very low probability of MU breaking 50 anytime soon.
If Micron's stock price does a 2-1 stock split the hard way ;-) before the end of the year, these players may just buy these calls back on the cheap and have no risk but a large upside reward going out through 2008.
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