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To: Poet who wrote (4502)	3/9/2000 2:52:00 PM
From: Bridge Player	Read Replies (2) \| Respond to of 8096

Let me start over, it is clear my earlier post was unclear. You buy the 100 strike for, roughly 100. (That will become 2 contracts with a 50 strike after the 2/1.) You sell the 200 strike for, roughly, 53. (That will become 2 contracts that you are short, with a 100 strike, after the 2/1.) This is not a credit spread; it is a debit spread. It costs money out of pocket (or borrowed on margin), some $4700 for each such spread entered. You hope that the stock is over 200 on current stock (over 100 after the split) at October expiration. That represents approx a 10% price increase in the stock from here, 184. At all prices over 200 (old stock) at expiration, your spread is worth exactly $10,000 per contract. You are long the 100's and short the 200's (both old stock). And, as an additional attraction, you have downside protection against a fall in the stock all the way down to 147 (old stock) at expiration before you start to lose any money. This is called a straight debit call spread, long the lower strike call (higher priced) and short the higher strike call (lower priced.) IMO the reason this is more attractive is the small move in the underlying that provides a double on your investment. If you buy a 100 strike for $100 per call, the stock must move to $300 by expiration for you to double your money. Same thing to buy a 200 strike for $53; the stock must move to $306 by expiration to double your money. Hope this helps. Roth and McMillan both cover spreads in their texts. BP