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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?


To: Stock Farmer who wrote (56027)10/22/2001 8:39:00 AM
From: GVTucker  Read Replies (1) | Respond to of 77400
 
John, Merrill isn't absorbing any risk at all.

In essence, Merrill is shorting Cisco, buying American call options, and selling European put options. That's a risk free trade. They then book the fees, and they also book a little extra in the process because European options are cheaper than American options.