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Technology Stocks : Newbridge Networks

NN 13.69

-2.5%

Dec 2 3:59 PM EST

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To: Dennis R. Duke who wrote (8591)	12/17/1998 12:11:00 PM
From: Ian@SI	Read Replies (2) of 18016

Dennis, If an institution has a large position in NN. e.g.IF Fidelity has 1% of the Magellan fund there at an average cost of $17, then it might think it's worthwhile to buy an insurance policy to protect the unrealized capital gain. It would do this by buying puts. As you said the action was in the calls, this is not likely to be what's happening in this instance. Another possibility is the widely rumoured but still unannounced G1 deal. If some institution with a large amount of money wanted to profit from this announcement when it comes, then it would buy the calls. As it now looks like the announcement will be delayed past December options expiry, the buyer would roll the options out one month. ...hoping that the deal gets announced prior to the 3rd Friday in January. If the volume truly is huge, then someone would need some very strong evidence that this is really going to happen before putting all that premium money at risk. Maybe one of this thread's options players has made a large bet. :-) Ian.

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