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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Joe NYC who wrote (107956)	4/27/2000 5:53:00 AM
From: boris_a	Respond to of 1575310

Joe, For me, the essential aspect of this strategy is the behaviour of my option position well before expiry. That's where you can avoid any loss or at least limit it distinctly. 1) I've got the impression there are several investors around counting on AMD being well over 130 by Jan01. (BTW, if they get the EPS numbers for 2Q and 3Q we expect and if they succeed in making some inroads to the corporate market in 3Q and demonstrating Mustang/Sledgehammer samples being competitive to freshly launched Willy, I think AMD will be clearly undervaluated at 150 by year end). 2) I think after 3Q report (mid October) we might judge much better if th price target (> 130) is still within reach. (Meantime, I have to watch a bit what's happening with my option position. If I want to close it with profit before expiry, I have to work a (little) bit, maybe by employing some transaction cost and a small loss to roll it down appropriately if AMD tanks < 70. I use the CBOE option calculator for this.) 3) If I close my option position right now, I've already got LEAPS Jan/100 without paying for them, because the calls initially traded at 2:1 in price are trading in a more favorable ratio now. This is due to the (with high probability) expected higher AMD price we see right now (well above 70). If AMD should reach say 100 by July, I can get out with having even more Jan100 in my bag. Didn't need cash (hadn't any), didn't need margin (didn't want any), didn't risk a loss (or only a small one for rolling down, see above). 4) Worst case is AMD being depressed to say 50 and coming back very fast to 70+ in December/January (shortly before expiry). In this case, in all probability I'm going to be unable to close my position with profit. In the contrary, I would expect to clearly loose on my option position (but still staying at least neutral considering the position together with my underlying shares. If you're interested, I'll keep you informed about my luck (if there will be any). Boris