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 : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: hpeace who wrote (12832)	1/6/1998 12:44:00 PM
From: John Puffer	Respond to of 97611

major flurry of pc buying in the last 2 weeks of december: Message 3103497

To: hpeace who wrote (12832)	1/6/1998 5:32:00 PM
From: Spots	Respond to of 97611

Yep. Today or tomorrow looks like the upstrike day to me. But for those of us who can't sell the stock in large quantities, we can: (1) Sell ITM puts naked at a high strike (as you suggested several weeks ago) (2) Use the proceeds to buy OTM puts to cover both the ITM puts sold naked (i.e., a put bull spread--friendlier than a pit bull spread <gggg>), plus puts to cover the shares owned. This leaves you downside neutral and an upside participant. You lose (versus naked stock) only in a range about the current stock price, assuming you're forced to hold to expiration. Of course, the objective is not to hold to expiration. On top of that you can still sell a CC on the shares owned plus buy an upside call for the strangle (the put side of the strangle is covered by (2)). You would step in by buying the upside call at the same time as establishing the (1)-(2) position; then sell CCs on a runup. This is complex. Nobody in their right mind would do it except to avoid the tax man, I think. Nevertheless, it seems to work out. The tax man would take out a good part of my net worth if I sold CPQ first, though I agree that's probably a better idea if you can do it. I'd welcome holes punched in this; especially before I do it. Spots