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

To: SecularBull who wrote (30763)	8/11/1998 12:05:00 AM
From: Night Writer	Respond to of 97611

Long on Dell, You have a solid observation. It depends on everyone in the firm holding the same point of view, and clients blindly following the firm's advice. Also don't forget upgrade came late in the week if I recall correctly. However, CPQ was hitting 36 last week. If they were selling at the right time, they could have already made a profit and switched to buying options. If you have traded options, you can be a very fast game. Also the brokerage houses have option specialists that buy and sell on any market imbalances. Those operations are seperate from anything else at the firm. The trading is based on quick trades to capitalize on any market imbalance. Maybe the article is wrong and should read buying rather then selling. Of course they could have sold all those options and have bought the stock for less. Making a $.50 profit per share on a million shares would make my day. Too bad I haven't got that much capital. <g> However, I don't think it will make their day. Do you really think GS would risk their business for peanuts? Last is the possibility that a client who bought at a lower price is cashing out by selling calls. A nice way to reduce commission expense. Then again maybe they think the Asian Flu will return next week.

To: SecularBull who wrote (30763)	8/11/1998 2:46:00 AM
From: Tony B	Read Replies (1) \| Respond to of 97611

LoD, Here is the explanation Goldman would probably give you: "While we are bullish on CPQ, we are short term bearish on the overall market in which a major correction still can not be ruled out. Therefore, we hedged our position with short-term deep-in-the-money calls against our position in stock. "If there is further pressure on the market, we feel CPQ should have good support at 30, at which point we would buy back our calls at a much lower premium. If the market stays flat or rises slightly, we will let the stock be called away and look to establish a new position in CPQ. Another option would be to roll out in time until we feel the market has stabilized sufficiently to no longer feel the need to hedge out position." While I would like to think they were just hedgeing their position, you have to wonder <ggg> Good Luck TB PS IMHO you're posts are welcome here as long as you (and others) refrain from the "my stock is better than your stock" pissing contest. There is money to be made by all, especially if we work/inform together. I look forward to your future insight.