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Technology Stocks : COMS & the Ghost of USRX w/ other STUFF -- Ignore unavailable to you. Want to Upgrade?

To: David Lawrence who wrote (14735)	4/13/1998 10:41:00 PM
From: jhild	Read Replies (1) \| Respond to of 22053

David, I agree there seems to be a fairly broad range of prices tolerated for the trade to occur at 42. There is even the outside possibility that it could go higher and bring a premium. There is the 15 day average price issue though. There is an implied volatility to be accounted for in that. The price at close may be greater or lower than market price on the effective closing date. As the price of QWST goes higher before the 15 day period, the likelihood of the price rising through the 15 day period decreases. In the event that say the price retraces in even volume through out that 15 day period, you will be "shorted" relative to the market value of the shares that you receive at the end of the period. So a 15% move from the beginning of the period to the end will yield about an 8% loss. And it could be much lower if the price falls the very day before. It's like you sold a put for a strike price that is determined at the end of the period, except you didn't get any money for it. The reverse is true if it rises through the period, it's like you got a free call at whatever the strike price is. It's simple if you know what that strike price will be. (Just as simple as TA if you know the future. <g>)