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Technology Stocks : Winstar Comm. (WCII)
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To: Brian Coakley who wrote (9338)11/17/1998 2:01:00 PM
From: SteveG  Read Replies (1) of 12468
 
<..Looks like someone wrote 500 calls and bought the puts for a debit of 5/8's ($31,250)..>

And are currently underwater over $50,000 (down 3/4 on put purchase and 1/4 on call sell)

<..The trade is essentially a short of 50,000 shares..>

The call selling alone is a 50K short. As can be seen by the current valuation, the bear spread is more aggressive than a simple 50K short. In addition to selling (assuming) the risk of a move above 35, on this # of shares, they also bought the risk of not moving below 30.

<..and means someone has a serious negative bias about WCII as the trade mirrors the movement of the stock price, and the person will make money if the stock moves lower or closes below 29 3/8 in April..>

Like a short, they have unlimited risk as the stock rises, additionally spending a few bucks anticipating the stock down. Wonder what they might know (or think they know)... They lose $100K for each point above 29 3/8 to ~35 and then $50K/point up after that. $45 by then would garner a loss of ~$1MM.
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