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Technology Stocks : 3DFX -- Ignore unavailable to you. Want to Upgrade?

To: Joe C. who wrote (13629)	7/7/1999 8:16:00 AM
From: Michael G. Potter	Respond to of 16960

JanOonk on the MF posted an interesting trade idea: boards.fool.com He is talking about bull spreads on December calls. Here's a clip from his post: if you're more bullish you can: widen your spread for example: buy Dec99- 12 1/2 FQLV 4 7/8 - 5 1/4 sell Dec99- 17 1/2 FQLW 2 3/4 - 3 1/8 This will cost me at maximum: -5 1/4 + 2 3/4 = 2.5 per call spread if TDFX closes at 12.5+2.5=15 i am breakeven higher than 15 I will make a profit with a maximum profit of 17.5-12.5-2.5=2.5 per call spread that's 100% not bad for 6 months Other than the fact that he omits commission costs (about $220 roundtrip for both of the pieces of the spread at Waterhouse Securities @ 10 contracts), it is an interesting idea. Of course, options are time limited so if you're right about the direction but not the timing (or wrong about the direction) you'll lose everything you invested. If 3dfx is not at $17.50 by December I would guess many of the longs here would be wondering if the stock is worth holding (me included) as the "year of 3dfx" to quote management will just about be over. Michael