Compaq Message Board - Msg: 5106079

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Technology Stocks : Compaq

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To: Tony B who wrote (28526)	7/6/1998 11:47:00 AM
From: Mike Fredericks	Read Replies (3) of 97611

Someone who is somewhat educated about options please tell me if I'm nuts when I'm looking at this trade. Jan '99 CPQ 25 Call trading at 6 x 6 1/2 Jan '99 CPQ 30 Call trading at 3 1/2 x 3 7/8 If you assume that CPQ will be 30+ in Jan '99 (which I believe is a very safe bet) then why not go long the 25 Calls and short the 30 calls for a spread? You have to put up $300 per contract (6 1/2 - 3 1/2) and in Jan '99 get $500 per contract for a 66% gain less commissions. All this if CPQ just nudges up 1 point in the next 6 months? What am I doing wrong? -Mike

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