<<But don't the April 20s become worthless if the deal goes through at 20? >>
Bellboy,
Sorry, for the delayed response, but the contractor and building engineer came over and were on the clock ($).
So say you buy 50 Dec 17.5's for $12,200 with commissions. Then assume the bid goes to 25 before the third week in December. Your investment goes to $36,875, a $24,000 dollar profit.
Alternatively, say you buy 200 Jan 20's for $4000. If the bid increases to 25, it's worth $100,000, a $96,000 profit. If you buy further out in time like I did, and it's a stock deal, then you have some time value still left in the Spring.
Of course, the odds are that there are no bids in such a short time. So I will likely lose $4000. The 17.5 calls will lose the spread (if we are at similar pricing near the third Friday of December) and possibly commissions if not exercised. Maybe you will break even if it trades up a quarter.
Of course, I don't have to tell a finance guy this stuff. ;^)
Meanwhile, I'm not selling any of my in the money options.
Regards,
Richard
PS It looks like reality is hitting Westell, now ~18.5. |
