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To: Uncle Frank who wrote (45848)	10/22/1999 9:14:00 PM
From: Claude	Respond to of 152472

thanks for the detailed explanation Oncle François. Great for the options challenged such as myself. Not that I buy or sell any but I love to learn nonetheless. Claude (rhymes with TOAD)

To: Uncle Frank who wrote (45848)	10/22/1999 10:25:00 PM
From: Jean M. Gauthier	Read Replies (3) \| Respond to of 152472

Uncle Frank, that is a spectacular explanation ... Wow... I am very, very impressed.... Point 1: You Said: You state that you bought the leaps contract for $5700. That works out to 57/share. If you exercised now, you could buy the stock for 160/share, but you would forfeit your premium, so your cost basis would be 217/share. That's $1.25/sh. more than you could buy the stock for on the open market, so overall, you would lose $125. --> A bit confused here, as the LEAP is worth 101 / 102 $ by itself... Hmmmm.. If I exercised now, would I pay: $ 21,500 for 100 Shares (as of today's price approximately) - $ 10,100 for the LEAP (as of today) (of which I paid $ 5700 already) =========== $ 11,400 Balance I have to pay .... Point 2: You said: . At expiry, every contract that is 1/4 of a point or more in the money is exercised automatically. I have tons of LEAPS in my account(s), for SUN, QCOM, MSFT, DELL, EMC & Cisco. Are you telling me that I need to do NOTHING if they are in the money, at EXPIRY ? That they automatically exercise on the 3rd friday of January 2001 & 2002 ? If that is true, I will end up with a ton of stock, and (a ton of margin too) <g> Point 3: Interesting observation about that $ 217/share the SELLER of the LEAP made. So he has his money tied up for another 2 years (or so), getting $ 160 / share later, but $ $ 57/share immediately for investment somewhere else ? is that right ? So he'll make $ 5700 / $ 16,000 or 36 % Return for 2 years. Is that right ? Point 4: To confuse the issue even more, I bought the LEAP slightly out-of-the-money, when the common was trading at $ 153 or so. Does that change anything ? Thanks a lot for the kind comment on my good fortune, but I ONLY have 100 shares for the future, not like the high rollers in this group <g> Take care of yourself Jean

To: Uncle Frank who wrote (45848)	10/22/1999 11:42:00 PM
From: StockHawk	Read Replies (2) \| Respond to of 152472

LEAPs >>At expiry, every contract that is 1/4 of a point or more in the money is exercised automatically. - >> Frank, I would agree that they Should exercise automatically, but it depends on the broker - some may not. To be safe one should always issue directions to the broker to exercise in the money options before they expire. That eliminates the risk of any mishap. (Dreyfus, for one, has told me they will not automatically exercise in the money options. I'm not saying an ensuing argument could not be won, buy why risk the hassel) StockHawk