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Technology Stocks : Newbridge Networks -- Ignore unavailable to you. Want to Upgrade?

To: Dennis J. who wrote (3733)	3/19/1998 10:22:00 PM
From: Ed Frye	Read Replies (2) \| Respond to of 18016

Dennis - didn't you forget to net out the initial cost of your long position in the example below? <An NN example: Buy Jun 25's @ 6 3/4 (NN at 30-30.5), ride it to 35. <Then create a bull spread by selling the Jun 35's for ~3. Ride to <expiration and close out. If stock closes at 32 at exp., < you get 7 + 3 = 10 in other words: Long: Jun 25s OPENED @ a COST of -6 3/4 and CLOSED @7 = + 1/4 Short: Jun 35s OPENED @ a Price of 3 and EXPIRED @0 = +3 Net Gain = 3 1/4, not 10. @stock=35, position would max out at 6 1/4, compared to a gain of 10, using 50% margin. Of course, options give you greater leverage (%gain is greater).