Compaq Message Board - Msg: 3236285

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Compaq

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Mike Gordon who wrote (14627)	1/22/1998 9:16:00 PM
From: Analog Kid	Read Replies (3) of 97611

IMO when it comes to stock splits, options get all out of wack. For example you could have bought a Feb. 60 call for about $3 last week with the stock at 60. Suppose you picked up 100 contracts. After the split you have 200 contracts at a $30 strike that are worth $1 1/2 after the split and the stock becomes $30. Seems cheap huh? It is and all of a sudden 15,000 contacts trade in one day! It gets even worse when you look at the Feb. 70's. Heck you could have picked up one of those for .50 before the split. Well now you have a Feb. 35 that only cost you .25 and you're only $5 out of the money. So who is getting hosed in this scenerio? I think it will be the call writers because sooner or later unless the stock tanks, the options will have to come in line with reality and go up in price. What do you think? Am I missing something here?

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next