PMC-Sierra (PMCS) Message Board

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Technology Stocks : PMC-Sierra (PMCS)

PMCS 11.65

0.0%

Jan 25 4:00 PM EST

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To: Billy Joe who wrote (2192)	10/16/1998 12:46:00 PM
From: JH	Read Replies (2) of 3818

Thread: sold covered calls Nov40s @4-1/2 against my core position bought at av cost of $33.875. Also sold short extra postion of calls Nov45 calls @2-5/8. 1)If PMCS closes above $40 by next expiration, I've effectively sold my position for a 31% gain in a month. 2)If it closes between $40 and $45, I would have made 39% in a month. 3)If it closes below $40, I would have lowered the cost of my core postion by $7.125 down to $26.75 4)Risk: if PMCS continues to rally strongly successively from today's $40 prices, I would need to hedge my postion by buying more common shares to double my core position. Assumptions: most of the good news is already built into the stock through its move from $28 a few days ago to today's $40 (+43%). I don't think it's realistic to expect further gains through extrapolation. $40 is also a significant resistance, based on the fact that the stock broke down after being unable to rally through $40/41 for two consecutive weeks in mid-July. I expect PMCS to consolidate together with the moderation of volatility. Both will be beneficial to my position.

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