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Technology Stocks : Micron Only Forum

MU 241.14

-6.7%

Dec 12 9:30 AM EST

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To: Land_Lubber who wrote (42584)	1/29/1999 6:00:00 PM
From: John Graybill	Read Replies (1) of 53903

My bet is that it was a spread -- he bought the 75's and sold the 65's. He has the potential to make ten bucks at expiration for a cost of about three bucks. 72 and below is a winner (the 75's will be worth $3 or more). Possible corollary: If he bought them at the same time, he's betting that it's going down but he's not expecting it to go down immediately. In fact, this kind of play keeps you from looking from a chump even if the stock continues up for a little while. Both options will lose some value at the same time, and getting out of the position isn't a total bust. (A possibility that I have dismissed is that it takes a little less capital to open a spread at $3 rather than buying the 75 first at $3.75 and then selling the 65 at 7/8. Reason: If you have $300K to spend on an out-of-the-money option spread, then you have $375K too. This ain't an advance on a VISA card we're talking about.) Good catch! Worth keeping in mind.

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