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Technology Stocks : Cymer (CYMI)
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To: Mark Mandel who wrote (21392)3/19/1999 12:22:00 PM
From: Guy Gordon  Read Replies (1) of 25960
 
By converting the options into stock I am not giving up the gain. I get to buy the stock at the strike price.

Let's say CYMI closes at 26 (hopefully). At that point the Mar 22.5 calls are worth 3.5/share. By converting them, I buy the stock worth 26 for 22.5. Thus that $3.5/sh gain is built into my new shares.

This is actually exactly the same as if I were to sell the calls and immediately buy the stock. (In the last few days the calls have had zero time value, and have tracked the stock price.) The only difference is that my basis in the stock is 22.5, not 26.

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