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Strategies & Market Trends : Tech Stock Options
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To: Soumen Barua who wrote (58347)2/24/1999 2:08:00 PM
From: broken_cookie  Read Replies (1) of 58727
 
Hi Soumen,

The situation you raise about being long an option that is slightly out of the money is an interesting one. Option expiration is on Saturday. This usually seems a useless distinction because options can't be traded afte 4:02 Pm on friday. What you can do is to inform the cboe not to exercise those options even though they are in the money. This can be useful if exercise and liquidation cost more in commissions than they net. It also removes the risk of establishing a position in the stock that may become vulnerable to breaking news over the weekend.

Cramer wrote a facinating piece (quite a while back) about how his hedge fund was long a ton of INTC calls 5 and 10 dollars in the money when INTC lost the lawsuit with AMD over cloning the 486. This news caused a 25 point tumble in INTC stock afer the close and Cramer was able to refuse exercise.
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