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Technology Stocks : All About Sun Microsystems
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To: uu who wrote (5254)10/30/1997 7:03:00 PM
From: Rational  Read Replies (3) of 64865
 
Addi:

The 2000 Jan 35 leap is ~$9.5. If you buy the stock for $33 and hold it for two years, the cost of capital on the extra $23 is about $7.5 at 15%. Thus, the extra cost of a leap is $2 which means you can buy many more shares than you could by going long. This leverage has no margin. What do you think about it, given limited resources?

Thanks in advance.

Sankar
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