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Technology Stocks : Disk Drive Sector Discussion Forum
WDC 181.54+1.1%Dec 26 9:30 AM EST
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To: Stitch who wrote (3778)6/23/1998 9:47:00 PM
From: Gottfried  Read Replies (4) of 9256
 
Stitch and all, RDRT puts - lots of them.
From today's street.com

In another tech play today, someone took a 4,500-contract LEAPS put
position on the beleaguered Read-Rite (RDRT:Nasdaq). Volume on the
company's 2000 January 7 1/2 puts reached 4,500, against only 100
contracts of open interest, at 2 1/16 ($206.25).

It may be a fortuitous hedge play. The Milpitas, Calif.-based Read-Rite
makes recording heads for disk drives, and its stock price has dwindled
more than 70% from above 30 last fall as demand for its products has
weakened. Read-Rite was at 8 7/8, up 5/16, this morning.

A Chicago Board of Options Exchange Read-Rite trader said the
LEAPS were sold to a customer as a hedge for a large long position in
the company's stock. "There has been a lot of big LEAPS put buying by
investors long the stock as a hedge against further downside," said the
pit trader. The trader added he didn't know whether the customer was
an institutional or retail player.

This hedge play gives some protection to the unfortunate soul who's
long Read-Rite stock if the stock dips below 5 7/16 within the next 18
months or if the stock falls enough to substantially increase the price of
the option.

thestreet.com

GM
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