Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 223.95

+1.7%

Nov 21 9:30 AM EST

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To: Steve Byers who wrote (18016)	3/20/1998 11:19:00 PM
From: Bruce Dorval	Read Replies (1) of 70976

Selling LEAPS as a synthetic short I have a large position in AMAT and have been trying to figure out what to do in this volatile environment. After considering buying Jan99 and/or Jan2000 LEAPS, I decided as a first move to sell Jan99 LEAPS with a target price of 40 on 30% of my position. They yielded 4 1/2. I am satisfied to sell the shares at, in effect, 44 1/2. If the stock drops significantly before then, the LEAP value will crash, and I can buy them back and pocket the difference--cushioning the down draft. If the stock stays below 40 through Jan99, I keep the premium.. If the stock goes way up, I will loose some of the upside and may have to hold the stock to expiration to get 44 1/2 exactly (premium shrink). So, this s a kind of synthetic shorting strategy. Comments? Bruce

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