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Technology Stocks : 3Com Corporation (COMS) -- Ignore unavailable to you. Want to Upgrade?

To: opalapril who wrote (43217)	5/12/2000 2:53:00 PM
From: Robohogs	Read Replies (2) \| Respond to of 45548

You will sell the COMSv, it won't settle until split date. Then you will get COMS stock and PALM stock with the COMS stock equivalent on that date to the short COMSv. You are then left with only PALM. Hope that helps. Is anyone else playing this one by shorting the rich puts?

To: opalapril who wrote (43217)	5/12/2000 3:13:00 PM
From: David E. Taylor	Read Replies (1) \| Respond to of 45548

Opalapril: The key date is actually Friday, 7/7 when the PALMV and COMS V will begin trading, two business days prior to the record date when the distribution ratio will be finalized. Say you're holding 1000 COMS right now. Think of them as 1000 underlying COMSV and 1500 PALM. If you want to dispose of the underlying COMS but still hang onto your right to receive the 1500 PALM on 7/27, you call your broker and tell him/her to sell 1000 COMSV on the ex-distribution market as a market or limit order. Whoever buys them will not have any right to the 1500 PALM distribution (because you didn't sell that), but will own only 1000 shares of the underlying COMS regular, which they will retain until they sell them. On 7/27, the buyer of your COMSV will still have the 1000 underlying COMS, and you will get your 1500 PALM. If you're doing this through an online account, you'd just enter the sale of the COMSV (or whatever the symbol turns out to be on your system) the same way. If you want to give this a whirl, go buy say 10 HWP, then sell the 10HWP*, and then hang on to receive your 3 A shares and the change on 6/2. And yes, if you think COMS is going to cave you could sell more COMSV than you own COMS, thereby effectively establishing a short position in the underlying COMS, while hanging onto your PALM. Same deal with the PALMV, you can sell just your 1500 PALMV and hence your right to the 1500 PALM distribution and retain the underlying 1000 COMS, should you be so inclined. And you will easily be able to short the PALMV, since the entire 532 million float will be hanging out there. Couple all this with puts and calls on the COMS and PALM regular and you can easily get a headache. I'm mulling over this, particularly what could happen to the present 12.5 million short position in PALM. At some point, probably prior to 7/7, some of the people who have these short positions will be thinking about covering. Wait until 7/27? No point once the arbitrage difference has evaporated by 7/7 (unless they're convinced PALM is going lower). Buy the PALMV? Who will be selling? (not me). Buy the PALM regular? Still a thin float, so might shove the price up rapidly and cause a squeeze. Any thoughts anyone? David T.