SI
SI
discoversearch

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 ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Chuck Williams who wrote (21562)3/12/1998 11:20:00 AM
From: Andreas  Read Replies (1) of 97611
 
For Two Reasons: (and probably others I haven't thought about)

(1) An in the money call, if bought, allows the buyer to essentially buy the stock for less than the stock price. This buyer believes the stock will go up in the short-term (life of the call) and since it will go up and down in conjunction with the underlying stock that investor can realize the same gain (or loss) but on a much smaller investment.

(2) An in the money call, if sold, affords the seller downside protection in the event the stock continues to drop. The downside protection is to the extent of the amount which is in the money. By the same token that investor is likely to be called away, but in the meantime he has earned some premium.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News