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Strategies & Market Trends : The picks

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To: Andrew Vance who wrote (3935)	2/5/1997 1:38:00 PM
From: Patrick Slevin	of 6124

RDRT Puts ....... As a hedge, if I owned RDRT and did not want to sell; in light of rumors concerning APM, RDRT, and WDC....I would think it would be prudent to own puts representative of a portion of my position. If the rumors are true, 5 things could happen. 1. Nothing. Everyone walks away. (possible) 2. RDRT offers to buy APM. (greater possibility) 3. APM offers to buy RDRT (lesser possibility) 4. Merger. (least possible) 5. WDC flys in & buys APM. (possible) The scenario you don't want, being long RDRT, is scenario #2, as this would impact RDRT's share price short-term. Owning puts would provide mid-term portfolio protection in this event. RDRT is rumored to be willing to pay $55 for APM. If this does happen I don't know where RDRT will trade. It should trade down...if substantially, your 'insurance' pays for the paper loss.

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