Rambus (RMBS) - Eagle or Penguin Message Board

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Technology Stocks : Rambus (RMBS) - Eagle or Penguin

RMBS 88.13

+1.0%

Nov 21 9:30 AM EST

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To: jopawa who wrote (7274)	9/18/1998 12:14:00 PM
From: MileHigh	Read Replies (2) of 93625

Let's say RMBS stays at 50 on the second Fri of Oct. You however are nervous about the next week, and you don't want to risk getting called away if RMBS explodes. You could then go and buy back your call at a much cheaper price and pocket the difference, and avoid the possibility of the stock getting called. Depneds really, the OCT65C on the second FRI of Oct might be asking 1 - 1.5...I sold it short @ 6.25 so I probably would cover it and make a nice profit, but remember I sold the call when RMBS was approx. 52, so if RMBS is 50 when I cover my call, I lost 2 on the stock I hold, but made approx. 5.25 on the call trade, so I really only netted out 3.25, make sense.....So the CC not only protected me on the downside of 2 (from 52-50) but the time value and volatility premium gave me an extra 3.25.......To have RMBS close @49.75 on 3rd FRI of OCT is pie in the sky best case scenario....Fun huh? But if RMBS pops, I'm sc@#$#$!! MileHigh

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