Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: GVTucker who wrote (165572)	5/24/2001 6:28:39 PM
From: stubba	Read Replies (1) \| Respond to of 176387

GVTucker - I find it difficult to believe that GS would have left those option positions unhedged for any amount of time without covering. I agree their primary objective in these type of deals was to take in money thru fee or commission and immediately turn around and lock in very small gain by fully hedging position. Like you, I would not think that GS would have been betting on Dell's price movement especially when you consider how bad they would have been killed on the earlier share buybacks. The synthetic long positions sounds more likely in my opinion but it would represent some pretty significant open interest. Since Dell does not provide details on when the contracts mature it is a little difficult to gauge. I believe the net share settlement would allow Dell the option of not having to buy back shares thru the put obligation but rather issue more shares that would cover the diff between strike and current mkt. This would certainly be a very bad sign if Dell chose this option but I firmly believe the language was only used to avoid balance sheet recognition on the put liability.

To: GVTucker who wrote (165572)	5/25/2001 11:20:58 AM
From: D.J.Smyth	Read Replies (1) \| Respond to of 176387

gv "Rest assured that the Goldman options desk isn't going to make its money speculating on Dell stock in either direction. They just want to get their fees." so it is with most smaller desks leaving share delivery and 'buying' to only their trusting but savvy/nieve clientelle on such large share amounts, while they sit back and collect fees, is hard to fill GS takes on more assumed risks when they can't find willing takers; one risk being they hold contracts, especially when dealing with so many shares. it seems logical they would assume more than simple 'fee' risk with Dell in such large transactions $2 billion...what we don't know is how Dell offset this relative to option activity below $20. their actual net is probably around $34 if GS owes anyone, it is Dell. they can't let their option queen go find another sperm donor. regardless, the net weight for GS, given Dell's unprecedented fall from grace, at this point, could be on the long side by now heretell you have a donor storage lockbox too