Newbridge Networks Message Board

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 : Newbridge Networks

NN 14.21

+1.7%

Nov 28 9:30 AM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: pat mudge who wrote (3688)	3/16/1998 1:06:00 AM
From: Rick Escher	Read Replies (3) of 18016

Hi. I recently was able to get into NNC at $30.00 CDN and have since been lurking on the side of this thread. I'm thinking about adding more NNC tomorrow but I'm wondering if someone could give me some advice first. Instead buying the stock I'm considering June 40 calls at approx. $4.90 CDN. By my reasoning, if NNC exceeds $45.59 CDN then the profit will buy a greater number of shares than the original amount had the shares been purchased outright. This seems obvious, but I haven't bought calls before, and I'm not sure I'm considering everything I should be. Here's my reasoning (excluding commissions for simplicity): $4,900 CDN buys around 122 NNC shares at the current price of approx. $40.00. The same $4,900 would buy 100 June 40 calls at $4.90. If the stock hits $45.59, then the call is worth at least $5.59 and the profit is $5,590. At $45.59, $5,590 buys approx. 122 shares. Thus, the profit from selling the call at any share price over $45.59 will buy a greater number of shares than would have been possible with the initial outlay. Thanks in advance for the help/advice. Rick

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next