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Technology Stocks : Winstar Comm. (WCII)
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To: Night Writer who wrote (9347)11/17/1998 11:33:00 PM
From: Steven Bowen  Read Replies (1) of 12468
 
"His explaination assumed a short position."

Just to clarify;

A purchase of 500 put contracts and simultaneous sale of 500 call contracts gives you an effective position of being short 50,000 shares, in this instance at 29 3/8. This is what Brian was saying (although I think he called it a syndicated short when I think what he meant was a synthetic short).

I can't think of a good reason someone would want to do this unless someone just wanted to short 50,000 shares but couldn't find them available to borrow. Whether you owned the shares or not doesn't seem to matter much, although I do see what NW was referring to. I'd be interested if anyone else sees anything else here. Maybe if Jason is still following, he could tell us why someone would want to do it. Maybe it's a way to go short without a chance of a surprise call in? Maybe someone bought 50,000 at 10 1/2 and this is a way of shorting against the box to lock in a sales price of 29 3/8 but delay the taxable event until 1999???
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