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Technology Stocks : 3Com Corporation (COMS) -- Ignore unavailable to you. Want to Upgrade?

To: Deepak NAik who wrote (20372)	8/10/1998 10:20:00 PM
From: joe	Read Replies (2) \| Respond to of 45548

yeah, your right. Thanks for the clarification. (I need some practice thinking about options) Still 1/28 = 3.6%; I guess this is what somebody gets for the risk of stock going below $25.

To: Deepak NAik who wrote (20372)	8/10/1998 11:07:00 PM
From: Will Hou	Read Replies (2) \| Respond to of 45548

Joe and Deepak, There were something wrong with both calculations you've made. The correct way is to do as follows: First, if you buy at 28 and short Sept25 for $4, your total cost is $24=28-4, not $28, not $29, not $25. Then, depending on the stock price on option expiration day, you will at most get $1 return (out of $24 put in, thus return of 1/24~ 4%), when the stock is at or above $25. This strategy is not designed for best possible return, as it protects downside (down to $24, which is your cost). This strategy would be best used when you are slightly bearish or even neutral. If you recall, in my last posting (when COMS is at 24 or lower), I was slightly bullish. If anybody cares, I am neutral to slightly bearish on COMS short term. Medium and long term, bullish. Short term, COMS might fall back to previous support and consolidate for the final upward move. If it holds above 28 and reaches 30 with good volume, that's another story. W Wang, you still there? Have you bought back your shares or still waiting?