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Technology Stocks : PairGain Technologies

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To: Mark who wrote (28059)1/18/1999 9:43:00 AM
From: Wolverine  Read Replies (2) of 36349
 
Mark, if you believe that PAIR will drop after the earning announcement, you may want to sell calls on PAIR instead of the underlying stock.

The Feb $10 call is going for $1.50. If PAIR goes below $10 on Feb 19, you pocket the $1.50 premium, you still own PAIR, you have lower your cost basis by $1.50, and you have avoided commissions on the buying/selling of PAIR. If PAIR closes at or above $10 on Feb 19, you have still sold it for $11.50, more than if you had just sold the stock itself.

Good luck,
Wolverine
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