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

To: Dr. Id who wrote (28530)	7/6/1998 12:54:00 PM
From: Eddie Kim	Read Replies (1) \| Respond to of 97611

All Internet stocks are flying today...what about AltaVista??? This is the problem of keeping AV as part of a larger whole. I think Compaq needs to spin off AV as soon as possible, and let us shareholders make some money. Keeping AV might be a better longterm strategy for CPQ, but as an investor I want to make the money NOW.

To: Dr. Id who wrote (28530)	7/6/1998 2:26:00 PM
From: Mike Fredericks	Respond to of 97611

Jan '99 CPQ 25 Call trading at 6 x 6 1/2 Jan '99 CPQ 30 Call trading at 3 1/2 x 3 7/8 If you are confident that it will be trading higher, why not just buy the call, rather than limit your upside by creating the spread? The danger is if the stock doesn't move, or moves lower, you lose your whole premium. I think it will probably trade higher five months from now, but I've also found that time goes alot faster when holding options... If I just bought the Jan '99 25 Call, my downside is $6.50, vs a $3.00 downside with the spread. If I just buy the Jan '99 25 call, I need the stock to hit $31.50 (an 8.6% increase over $29) vs. $28.00 (a 3.6% drop below $29) in order to break even. I also only need a rise to $30 to get my maximum profit, which is 66%. To make a 66% profit just buying the call, I would need to be able to sell the call at $10.80, which would require a stock price $35.80, or a nice 23% gain in stock price from here. I am lowering my risk in a major way and yes, I'm limiting my upside. But if the stock jumps 23% in 6 months, I'll be happy anyway because I'm long the stock. Other thoughts? I'm thinking that 66% return in 6 months ain't shabby, the risk is low, and I should free up capital to make this trade tomorrow. -Mike