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 : PairGain Technologies -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (20546)	2/11/1998 7:25:00 AM
From: ENOTS	Respond to of 36349

meantime your broker smiles at the interest rate they are collecting, so I guess everyone makes money, no one loses.. wonderful system.....

To: porcupine --''''> who wrote (20546)	2/11/1998 9:07:00 AM
From: margin_man	Read Replies (1) \| Respond to of 36349

<<Have I made this as clear as mud?>> porc, You have. The only thing I found is: Based on the same historical data, the Jul 22.5 call would be 3-1/2 x 3-7/8. Meanwhile, I have gained 6-1/2 more points of margin buying power, since the stock has risen from an ask of 17-3/4 to a bid of 24-1/4. So, I can buy back the Jul 15's for 9-3/4, and sell the Jul 22.5's for 3-1/2, increasing my debit by 6-1/4 Even if you have gained 6 1/2 pts in margin buying, it doesn't mean you will have an option buying power of 6 1/2. So if you buy back the Jul 15 for 9 3/4 and sell the Jul 22.5 for 3 1/2, you will need 9 3/4 - 3 1/2 = 6 1/4. This amount is a lot more than the (stock) buying of 6 1/2. This can be done if you pump in more cash. And that's why I asked how it can be done. Patriot

To: porcupine --''''> who wrote (20546)	2/11/1998 12:02:00 PM
From: Nazbuster	Read Replies (1) \| Respond to of 36349

Porc, re: "Time Premium" I'm seeking to capture the difference between market price and Intrinsic Value Isn't this like saying that you lose money on each transaction but make it up in the volume? <G> It seems that selling at 5 and buying back at 9 will only work when circumstances allow you to benefit from the dissipation of a very large premium for time-value and a rise in price while owning the stock. It's still not entirely clear to me... I'll munch on it for awhile.... How about inverting your great description to show us how it goes wrong and you lose your life savings doing this? This might make it clearer!