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Gold/Mining/Energy : Chesapeake Energy CHK

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To: Taylor Mill who wrote (345)3/1/1998 1:55:00 PM
From: Mark Adams  Read Replies (1) of 726
 
What do you mean by this? The HUGO severance amts? If so, this is not unusual IMO.

I know it's not unusual- thats what bothers me a bit. Thanks for your perspective; it helps hearing from a shareholder with a position in both companies. Hugoton is an unknown for me.

I play options, usually selling covered calls or buying puts/calls. Doing so requires some estimate of the risk to the upside/downside. Usually you can take a company generating X amount of cash flow with Y amount of profit, look at their balance sheet, and get a sense of the risks involved.

Mergers complicate things, increasing the risks. Therefore the option premiums should reflect this. CHK options don't seem to reflect much positive sentiment (or negative for that matter).

It's probably that darn Financial Hijinks book I read last week coloring my perceptions.
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