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Technology Stocks : Bay Networks (BAY)

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To: Mark The Trader who wrote (2160)11/13/1996 11:18:00 AM
From: Srinivasan V S   of 4270
 
Mark,

I would apreciate your comments on this -
I have never traded options except some leaps. So

1. In a bearish senario he gets all his money back and everything
is fine.
2. In a bulish senario
In any sharp move up between now and Jan I assumed
the two month premium would be over 15%

so you (P(BAY,JAN)-20) vs (P(BAY,JAN)-25)+0.15*P(Bay,JAN)
Which is very close to each other 25-50c either way.

The only range in which you could loose more than a buck was
at 24 and 25.

Maybe my 15+% time value for 2 months is not very accurate.

I thought this was optimal for some one who wishes to take
his trade back - basically belives that he should not have
bought those options. With BAY@ 22 Mar 25 at 3.5 would be
hold unless you thought BAY was on it's way down going forward.

Thanx

Srini
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