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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Joe Sabatini who wrote (67029)	9/23/1998 8:17:00 PM
From: Timothy Liu	Respond to of 176387

>Maybe I'm confused. Why would he be safe if Dell was below 67 3/4? If Dell is above 65, those calls are in the money. Whoever is holding them would want to at least execute on the calls to get back some of their gamble...er..investment. :) He can buy it back at expiration. For example if Dell is 66 at expiration. He can buy back the option for 1$ (for which he got paid 2 3/4). Since option spread is wider and comission is also higher, a better way is let it be called away and buy back the shares at 66. Tax consideration may play here. Tim Just my 0.02$

To: Joe Sabatini who wrote (67029)	9/23/1998 9:37:00 PM
From: Chuzzlewit	Respond to of 176387

Joe, assume that Dell is at 67 3/4 at expiry, then the option will be trading at 2 3/4 (exactly what you paid for it). You buy the option back just before expiry and all you are out are the brokerage fees. But you have two other advantages -- you also get 2 3/4 points of downside protection and you get the time value of the premium (around 24 days). Basically, the strategy involves stripping off some of the risk and unlimited upside potential in exchange for a premium. TTFN, CTC