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Technology Stocks : Novell (NOVL) dirt cheap, good buy? -- Ignore unavailable to you. Want to Upgrade?

To: EPS who wrote (22427)	6/2/1998 7:22:00 PM
From: EPS	Respond to of 42771

More! As an anonymous writer pointed out to me by e-mail. The suggested trade carries more risks and is considerably less attractive. In fact. If 10 August 5 calls are sold for 5, say, and 15 August 7 1/2 are bought @ 3, the cost of the transaction is zero as claimed. However, for a strike price of 7 1/2 + x, the difference x* 1500 - (2.5 +x)1000 = x500 - 2.51000 represents the possible gain and to break even we need x500 = 2.5 * 1000 that is x = 5 i.e a strike price of 12 1/2, which makes the whole thing much less atractive. VD