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Strategies & Market Trends : Z PORTFOLIO
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To: Ron McKinnon who wrote (1629)5/2/1998 6:57:00 PM
From: DanZ  Read Replies (2) of 11568
 
Ron,

Ok, I goofed the calculation again! Geez LOL

This is correct:

PUQEV 1/6 dan -30 0.37500 -1125 2.75 -8250 -7125 -107 -7232

By the way, the commission is $1.75 per contract * 30 contracts =
$53.50. It's $107 for the round turn. This assumes that we will
eventually buy them back, but the commission will only be $53.50 if
we let them expire in the money. If that happens, we will be forced
to sell our stock at the exercise price ($12.5) and we won't have to
do anything with the options. They will just go away.

I don't have to buy the calls back but I will have to come up with
4500 shares of stock if they are exercised. I don't plan on holding
the options until expiration unless the stock gets below 12 1/2. The
options will be worthless if that happens and I won't have to do
anything--they will just expire.

One reason to reverse the position is because there isn't any way to
make any money on it anymore. The options are so far in the money
that they go up the same amount as the stock and our net is zero.
All this is doing is tying up cash. The only way to make any money
on this position is to reverse one side of the transaction and hope
that we take the right side off. If I buy the calls back and hold
the stock, I'm betting that the stock will keep going up. If I sell
the stock and hold the calls, I'm betting that the stock will go down.

What a mess, huh? LOL
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