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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: upanddown who wrote (34649)	10/27/1998 5:13:00 PM
From: Cynic 2005	Read Replies (1) \| Respond to of 132070

<<Why do you see that as possibly being superior to a straight sell ?>> From what you told me I thought that there was a spread in the intrinsic value [say (current bid on STOCK-strike price) ~= $10] of the option and the option bid (say 9 3/4). In otherwords, you get only 9 3/4 if you sell the option at bid (one trade) and $10 if you were to exercise and sell the stock (2 trades) on 10 contracts it amounts to a difference of 1/4 point or $250. If you pay a commission of $25 per trade (assume it is the same for both option and stock trade, though option trading costs you more) you will get an extra $200 from selling the stock short and exercising the call to cover it. Clear? (I am not counting the time value in this example.)