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To: Sarmad Y. Hermiz who wrote (6917)	10/4/2003 5:15:02 AM
From: Sam Citron	Read Replies (1) \| Respond to of 13403

I think the most likely price for Xilinx in mid January is near $40. Are you referring to Jan '04, '05, or '06? I have no position in Jan '04 options. Cary recently predicted a price of 60 by Jan '05 (post 5686), although he admits to some uncertainty about the timing, if not the doubling of the price. You asked about the prices paid for the options. Here is the straddle that I legged into: XLNX BOT to open 20 Jan 05 35 Calls 5.70 (6/2/03 post 5711) XLNX Sld to Open 20 Jan '05 25 Puts 4.40 (5/30/03 post 5665) Then on Sept 10 I executed the following order: XLNX S 20 Jan 06 30 Puts 7.10 (post 6796) I did this mainly as a hedge on the uncertainty of the timing. I may or may not add Jan 06 calls to it partially depending on how the '05 Leaps look like they are working out. I will ignore this last position for now and focus on the aforementioned straddle. Here's my P/L analysis: If XLNX < 25 than I am put the stock and it ends up costing me 25-4.40+5.70=26.30, which sounds like a reasonable price to pay for XLNX in a year and a half. If 25 < XLNX < 35, then both my puts and calls expire worthless and I am out (5.70-4.40)x2000= $2600. My breakeven is 35-4.40+5.70=36.30 Here's the calculation of my upside potential: Take the price of XLNX on the third Friday in Jan 2005 subtract 36.30 and multiply by $2000 to determine my profit. If Cary's $60 prediction is realized, that's 27.70x$2000=$55,400, which isn't too bad for a net outlay of 5.70-4.40=1.30 x 2000 = $2,600 over a year and a half. That's a gain of 2000%. A more modest price of 46.30 would result in a gain of $20,000 or a 670% return. That's how I look at it anyway. I'd be interested in any flaws in my logic, as this is the first time that I have done an options spread of this type. When I compare the results to a straight buy of XLNX stock, it looks quite favorable as long as XLNX appreciates at least 25% over the next 16 months. But the $2,600 that is at risk would only buy about 90 shares of stock at today's price, versus 2000 synthetic shares through the straddle. So I look at it simply as a cheap way to buy calls. Maxpain would be the buyer's remorse in having to buy 2000 shares at 26.30 when the stock is < 25. But even this worstcase scenario is preferable to a simple LT buy and hold at today's market price. Sam