Vivus, Why the Slide? Message Board

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Biotech / Medical : Vivus, Why the Slide?

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To: Don Dunlap who wrote (3621)	9/18/1997 11:03:00 PM
From: Rubble	of 3991

Don- You would be giving up a big part of your current profits if you bought protective puts, but you'd also lock in a profit if the stock declined: You paid 66... if you paid 6 3/4 for the 80 puts, you'd have a guaranteed sale of 80 - 6 3/4= 73 1/4, no matter how low FDX goes. Thus, til April you'd be guarateed a profit of 73 1/4 - 66 = 7 1/4...or a little over 10%. On the other hand, you'd be giving up 6 3/4 of profit if FDX is over 80 in April. I'm not really sure what the best thing is for you to do. It depends on your investment goals and willingness to take risks. I'd say ask your broker...but if he gets commissions on your purchases, he'd of course tell you to buy them. Take a look at the numbers and decide for yourself whether the cost of the options is too great compared to the added security. You could also put in a stop order to sell as protection against a decline...75 sounds to me like a good number.

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