Novell (NOVL) dirt cheap, good buy? Message Board

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Technology Stocks : Novell (NOVL) dirt cheap, good buy?

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To: Ally who wrote (21304)	3/20/1998 10:21:00 PM
From: Ben Antanaitis	Read Replies (2) of 42771

Steve, Denise, The threshold price is set by your brokerage firm. Thie is the section on 'automatice exercise' from the CBOE handbook: On the other hand, if the option has an automatic exercise feature-such as one that will cause the option to be automatically exercised at the expiration if it is in the money by a specified amount- the option may be exercised at a price at which the holder would not voluntarily choose to exercise in view of the transactions costs of exercise or other factors. The transaction costs associated with the exercise could even exceed the cash settlement amount of the option, with the result that the holder would realize a net loss from the exercise. Conversely, an option that has a cash settlement amount that is less than the threshold amount cannot be exercised even though the option holder's transaction costs may be low enough to permit the option to be exercised profitably. In such a case, the option may expire unexercised. See: cboe.com for more info. But the cutoff is set by the brokerage, and Joe-six-pack usually gets a $.75 cutoff.... the brokerage house wins. But you should check with your broker, you may be surprised. Ben A.

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