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Technology Stocks : Full Disclosure Trading -- Ignore unavailable to you. Want to Upgrade?

To: Sam Citron who wrote (6918)	10/6/2003 8:11:08 AM
From: Sarmad Y. Hermiz	Read Replies (1) \| Respond to of 13403

OT *** re Xilinx straddle Sam, I don't see anything incorrect in your calculations. Even assuming my very conservative target price of $40/sh for Xilinx (in Jan '05), your profit will be (40 - 36.30) x 2000 = $7,400. On an investment cost of $2,600. Of course what we keep glossing over is the potential outlay of $110,000 to buy the shares if they are put to you. But I have a more basic reason for not doing a trade like that for myself. Which is that I would have to keep the $110,000 in reserve for 1.5 years. So really that has to count in calculating the return. If I had these positions, my preferred outcome would be if Xilinx would get into the 40's in the January '04 euphoria, so I would re-purchase the puts very cheap. And then let the calls ride. That would add to the cost basis, but the risk would be much much less. And the $110,000 could be redeployed. Sarmad