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Technology Stocks : WDC/Sandisk Corporation -- Ignore unavailable to you. Want to Upgrade?

To: Binx Bolling who wrote (19246)2/21/2001 6:12:25 PM
From: Road Walker  Read Replies (1) | Respond to of 60323
 
Binx,

A collar can be executed by any stock holder. Simply buy puts at the current stock price, sell calls at the next higher stock price. You pay the difference in the options price. If the stock goes up past the call strike, you lose the stock and get the appreciation to the next higher price, plus the option premium, minus the cost of the put. If the stock goes down, you have a flat trade on the puts & stock, keep the premium on the calls. If the stock goes up A LOT, you are stuck selling below market. If the stock stays the same, you lose the difference between the cost of the puts v. the income from the calls.

Wish I had done a few collars over the last six months.

John



To: Binx Bolling who wrote (19246)2/21/2001 7:00:37 PM
From: Starlight  Respond to of 60323
 
Many financial firms -- from Morgan Stanley Dean Witter, Goldman Sachs, and Merrill Lynch to upstart Derivium Capital -- have descended on Silicon Valley in the past few years to peddle monetization gambits. Leave it to the brokerage firms to find another way to make a dollar.


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