Thread: I think it is Time to buy those DEC Leaps again...
Fortget about all the 'hypes' from CPQ thread, CPQ has corrected from $40 to about $25 (37%) and they keep telling us to think long term. I would like to think long term, but don't want to buy at the high and use this excuse for my poor timing decision. It is as if those DEC holders who bought at $190,
$90, $75, etc should have kept for long term. Remember, CPQ is still a PC Company who plans to become big by acquiring DEC. One of DEC's biggest problem all along was the fact that it was too big!!
Now, the way I see it, DEC will follow CPQ and will go down to the point where this deal is no longer attractive to shareholders (not us small guys but the big boys), so then, one of two things could happen:
1. CPQ sweetens the deal or
2. The deal is off (which I doubt as too much ego is written on
this from Palmer and CPQ CEO).
So, here is what I think would be a wise trading opportunity. Let DEC go down with CPQ, let's say (DEC $45, CPQ $20), then buy Jan 2000
DEC 30 (deep in the money) calls (symbol: LDCAF). I noticed that option is priced the same as Jan '99 30 calls (symbol: VDEAF)which could mean, market makers don't think DEC is going to be around as an independent entity after Jan '99. So you buy 12 additional months time
for free.
Remember DEC was over $50 a few months before CPQ announcement. By owning a Jan 2000 option, you will be safe if the deal falls apart and have plenty of time for DEC to recover to its' own trading range which with all NT related stuff and the deal with Intel minus Mr. Palmer (wishful!!) could get it back to $60.
My gut feeling is that one way or another DEC will be purchased for no less than $60. That's what it would have been when they first announced. I could be/have been wrong.
Good luck to all,
PS: I do own DEC Jan '99 30 calls and will add next week.
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