If a shortage of investment funds is the problem AND you are a bit of a gambler, the Jan 98 call options are attractive. I just bought the Jan'98 10's at 7/8. I figure even if the stock doesn't do much, I can get my money back in June. On the other hand, the stock could easily be 10 or 12, or higher, by June/July.
If one looks back at the stock price after Delphi was released, you saw a considerable runup in price. I don't know whether it was attributable to Delphi or some other factor(s), as I was not following the stock at that time. But assuming, arguendo, that Delphi WAS the cause, then what can we expect from the new products? A runup to low 20s is entirely possible. While BORL is taking a beating right now, remember the stock markets are fickle and foolish. This stock is not worth only 6 now; nor was it worth 21 a year ago. And there certainly is not (21-6=15) difference between the year ago price and today's.
My point is that BORL's low price can change overnight in response to favorable publicity it is starting to receive for these new products, AND the cost of holding the Jan 98 options for the next six months is likely to be nil (even if the stock goes down, you can sell the options in June for SOMETHING, and you're not paying much to begin with).
A shortage of investment funds is little reason to hold off if you have a gambling bone in your body (if you DIDN'T have, you wouldn't be buying BORL anway). You can sell 100 shares of BORL and take the proceeds and buy six options. As I see it, BORL will either go up in value within a year or be sunk because the cash will have been drained. So really, you are risking little more by purchasing six calls than you would be by holding 100 shares of stock.
To recap:
1. If you're not a gambler, get out of BORL. It is risky, at best;
2. If you're going to gamble, you may as well own the calls. Six months from now, the calls will likely be worth about what they are now, certainly 1/2 what they are now. If the stock has done any good, they'll be worth substantially more than what the stock would be.
David |
