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Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: milesofstyles who wrote (5527)	6/2/1998 6:25:00 PM
From: Sergio H	Read Replies (2) \| Respond to of 29382

2 for 1 splits are usually announced by Companies whose stock price has been going up. It's a bullish signal because they demonstrate that the company believes that their stock price will continue to rise. The split allows more investors to establish positions in the stock and it is not dilutive since the per share ratios will be the same pre and post split. I agree with your statement that the fundamentals have not changed, but the perception of the fundamentals is enhanced by the split. Great historical examples, off the top of my mind are Disney and Iomega. Would love to see the efficient market study that you mentioned, or the highlights. I'm always interested in learning. Sergio

To: milesofstyles who wrote (5527)	6/2/1998 10:46:00 PM
From: Ken W	Read Replies (1) \| Respond to of 29382

Miles, 2 for 1 splits: A favorite trading tactic is to wait for a stock to split and play the call options as the stock retraces to the pre-split high. The history of this play are long and very profitable. DELL is a perfect example. Was at 81 about Dec. went to 94, announced a 2 for 1 went to 140, split and went back to 98. Calls on all of these price moves would have made a small fortune for someone with capital. CAT does the exact same thing about every 5 years. Ken W