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Technology Stocks : Compaq
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To: Dulane U. Ponder who wrote (23912)4/4/1998 6:03:00 PM
From: Andreas  Read Replies (1) of 97611
 
Actually I sold calls, both cpq and ko. My return on ko if I get called away in May is excellent - roughly $5.00/shr. If I were inclined to keep my ko shares I would do the following. (1) buy back the May $75 calls and immediately thereafter (same day) sell the August $80.00 calls. You'll notice that the may $75s and the august 80s are about the same price - so very little money out of my pocket. I then pick up another $5.00/shr. in ko stock price which allows me to keep ko until august. Come august, coke will either have (1) gone down in price, in which case my moving up from 75s to 80s was a mistake or (ii) coke will have stayed the same, in which case I'm indifferent and actually quite pleased; or (iii) coke continues to go up, in which case I repeat my strategy and roll out and up once again.
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