To: tom pope who wrote (3060 ) 6/9/1999 3:39:00 PM From: michael r potter Respond to
Thanks for responding, you are correct. It is sometimes of interest to look at equivalent puts and calls. For Ex, the ten point out of the money July 60 calls are $12 7/8 ask and the July 80 puts are $15 3/8 ask. Around a $2 1/2 premium on the puts over the calls. Other strike June and July puts show less of a premium, but still put premium over the calls. Usually the reverse is the case, but in this one, it makes sense because of the Ex. ipos. coming up and some drop. Options are indicating anywhere from $1 to $3. I just sold trading position, mostly based on the level of interest rates, and desire to have more liquidity. Sfe went because it is a very overweighted position for me and also the thinking that if this is the last day to own SFE to get ICG, there are an absence of natural sellers [who wants to sell today and miss the IPO by a day] and some desire on the part of buyers to get in today to get the rights [supply/demand=high price]. That reverses tomorrow, and it would seem that SFE might take a slightly bigger than expected drop. I don't see the firepower for an immediate move up from here. Chart and stochastic OK, but as always, it is only one input. Another factor was reading the reference article by Still Learning, which caused me to reflect and ask if my level of exposure is appropriate given the risks out there. Will respond later to the article. Always open to getting back into SFE either higher or lower. A break above $74-$75 would be positive, but I don't expect it soon. As far as other protection [other than outright selling of SFE], the July $60 calls would offer fair protection, you would get the IPOs, but upside would obviously be limited to $72 1/8. Could do the July 70 calls for $7 bid which would give some protection, and offer fair upside to $77. Depends on your outlook. Mike
