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Technology Stocks : Compaq
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To: Jerome who wrote (93782)11/17/2001 9:33:06 PM
From: bigja  Read Replies (1) of 97611
 
Jerome..."The shares yield a 25% gain and the options yields a 50% gain on the same amount of money invested"

My two cents...if there is negative merger news in January, the value of these calls could drop in half if the common stock goes back and retests the lows. Since these calls expire in 60 days there is not a lot of time to recovery. You could lose 50% on the calls versus taking a 25% loss on holding the common.

For another few cents you can buy the 5's for April 02 or Jan 03.

What do you think about selling the April 02 $12.50 Puts and collecting $3.20 now and maybe never having the commons put to you if the merger goes through?

Jeff
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