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Technology Stocks : Creative Labs (CREAF)
CREAF 0.411+11.2%Dec 8 12:12 PM EST
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To: g.w. barnard who wrote (9196)1/29/1998 10:09:00 AM
From: prakash  Read Replies (1) of 13925
 
There is also another strategy which may work out perfect with this stock. Synthetic long - where you sell the puts and use the premium to buy the calls.

July 17.5 puts are at 3.5, and July 20 calls are at 3.25. Instead of just buying July 20 calls, you could sell the July 17.5 puts and use that premium to buy the calls. This way if the stock were to go to 30 in july, you are looking at a pretty good return for virtually no investment.

Downside of this approach: 1) most brokerage houses will ask for collatral when you write puts. For example, I trade with Fidelity and the minimum amount they need is 2k per contract. You may as well buy 100 shares of CREAF for less than 2k. 2) If the stock were to be stuck in this trading range and never went above 20 by july, solves no purpose and the money is you deposit to write the puts will be dead investment.

Prakash
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