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Technology Stocks : Winstar Comm. (WCII) -- Ignore unavailable to you. Want to Upgrade?

To: Richard Dunaven who wrote (7953)	8/27/1998 12:27:00 AM
From: Steven Bowen	Read Replies (2) \| Respond to of 12468

"If you left your margin acount in tact and sold at 53 you would have 53k on the same 14K investment. 53k / 14K is 378%. You loose 12 K on the deal." Don't forget to subtract out your 14k margin balance leaving you an equity in this case of only 39k, less the margin interest for a year and a half. So the option case still wins, but your point is well taken. A million scenarios can be run. But I believe that the biggest advantage to the leaps is totally aside from the percentage gains; it's that I believe you will sleep a ton better in the mean time with a longer time frame in mind and no worry of a margin call, and you don't need to sit and watch margin interest eating into your principle as your stock drifts. Also, anyone gutsy enough to be 50% margined at this point may well be forced to sell due to margin calls if the stock continues to fall to the teens, and at that point your equity is gone for good and you will not gain near as much even if the stock does then rebound to 53. If you buy the leaps and the stock drops to 10 and then recovers to 53, your total profit potential remains intact. So apart from being a better performing investment in most scenarios, I think leaps are also safer(than margin) and allow for better nights sleep.