Scott:
I don't know if you have ever bought options, but it is a cheaper way of taking a stake in a stock. Right now, you could buy a call option on FEET for June 1997 at a strike price of 20 and pay around $5 - $5 1/2. That is an effective price of $25 - $25.50. For one contract (100 shares), you would put up $500 - $550 and have an option to buy the 100 shares anytime between now and June 20th at a price of 20.
The most you could lose is the $500 - $550 plus commission. That would happen if you let it expire worthless. If the price of FEET went above $26, before June, you would be making money on the deal. Even if it stayed between, $20 and $25, you could sell the option before June 20 and get part of your money back, since it will be worth something as long as FEET is above the strike price of $20. In fact, even if you decided you didn't want to buy the stock in June and the price was $30 (maybe too rich for your blood at that point), the option would make you a nice profit since it would sell for $10, twice what you paid for it!
Just a thought.
Walter High |
