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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Mike Maxton who wrote (25005)	10/7/1998 7:56:00 PM
From: BelowTheCrowd	Respond to of 70976

Mike, Thanks for that info. I rarely invest in LEAPS, so the long-term implications of a takeover at lower than strike price has never been something I looked in to. In the short term I can't think of a whole lot of situations where this would matter to me. Good info. mg

To: Mike Maxton who wrote (25005)	10/8/1998 5:13:00 PM
From: Robert O	Read Replies (2) \| Respond to of 70976

I figured the best place to go for a "real-world" answer was the real world so I prompted the WCOM SI thread with this question: Can anyone who owned MCIC long term options or LEAPS let me know what does happen to an out of the money call that has a strike price that was never achieved for MCIC previous to and including the day the buyout occurred by WCOM? Many belive it becomes worthless. Perhaps someone here actually lived (or knows for sure) the outcome of this scenario. Thank you. A helpful Harry replied: To: Robert O (3382 ) From: Harry Sharp Reply # of 3384 If GE offered $25 CASH for AMAT, your $30 LEAPS are worthless. However if GE offered, say, one share of GE for three AMAT shares then your LEAPS are tied to GE's stock price. With GE at $100 your LEAPS would have an intrinsic value of $3 over call price. Time premium would be on top of that and would reflect the anticipated future value of one-third share of GE. I didn't have the MCIC LEAPS but I did have Bay Networks LEAPS before Nortel bought them for .6 share of Nortel for each Bay share. My Bay Networks LEAPS are now tied to the value of 60 shares of Nortel. At expiration I can sell the LEAPS or exercise the option to take 60 shares of Nortel for each LEAP I hold. The MCIC LEAPS will work the same, they are NOT worthless and will go up or down depending on WCOM's stock price performance. ** So there you go... just confirms your piece from the CBOE. And for those of you looking for an easy bar bet (maybe a bar near the CBOE where I live in Chicago): What does LEAPS stand for?? {answer below} "What are Equity LEAPS? Equity LEAPS, or Long-term Equity AnticPation Securities are long-dated put and call options on common stock or ADRs. These long-term options provide the holder the right to purchase, in the case of a call, or sell, in the case of a put, a specified number of stock shares at a pre-determined price up to the expiration date of the option, which can be three years in the future." RO