Cyberian Outpost (Symbol: COOL) Message Board

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Technology Stocks : Cyberian Outpost (Symbol: COOL)

COOL 0.103

+10.6%

Sep 5 5:00 PM EST

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To: Joe Pirate who wrote (1059)	2/2/1999 10:26:00 PM
From: Stallion	Read Replies (1) of 1932

If you became bearish at $60, Write at the money Calls and Buy out of the money Puts === Lowers cost and protect downside. For example... BLD on Toronto Say you owned 1000 at $35... today at $40 To Protect downside, Sell 10 March $40Calls for $4; Your cost is now $31. Buy 10 March 37.5Puts for $2.5; Now your cost is $33.50.... Net Effect... Worst case $4 profit per share and BLD is <37.5, Best Case $6.50 per share and BLD is >40. If you beleive the chances were 50/50 then the expected value would be $5.25 profit per share... So by giving away some opportunity you lower your cost and protect the downside. Either way, you are increasing your current gain of $5 to 5.25 on an EV basis. This is just an example but does not reflect my opinion of BLD... Just used today's prices... I will definetely consider this strategy when COOL goes to $60. Hope you appreciate the insight! Any questions or comments are most welcome. Best Regards, Stallion

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