WDC/Sandisk Corporation Message Board

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Technology Stocks : WDC/Sandisk Corporation

WDC 150.21

+8.7%

Oct 31 9:30 AM EST

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To: david1951 who wrote (60280)	5/18/2016 10:47:12 AM
From: Art Bechhoefer	Read Replies (1) of 60323

I wrote covered calls with a strike price of $80 on a portion of my SNDK holdings when SNDK was trading above $77. During the ensuing months between then and when I bought them back, the price of SNDK dropped to around $75. Buying back the covered calls before expiration netted a profit from the declining premium on the calls as well as the slightly lower price of the underlying shares. By the time the actual merger was completed, I had no outstanding option position. As I've pointed out previously, the sale of covered calls in that situation was a conservative strategy, motivated by the uncertainty surrounding the long term price of WDC shares, given the huge addition to debt required to buy SNDK. In markets like this, there is a great deal of motivation to use strategies that minimize risk. Art

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