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

To: Uncle Frank who wrote (90995)	1/23/1999 11:09:00 PM
From: Catcher	Read Replies (2) \| Respond to of 176387

i think a pattern is emerging within the tech sector but need some help in completing it... intc beats estimates (its inside everything) msft (also inside everything) blows estimates away gateway beats estimates... ibm beats estimates but hardware sales are sluggish... what is dell going to do

To: Uncle Frank who wrote (90995)	1/24/1999 8:57:00 AM
From: Mark Peterson CPA	Read Replies (1) \| Respond to of 176387

Uncle Frank, The software has internal protections that prevent from cutting and pasting into other applications. However, FYI: With the stock closing at 83, the Dell FEB 85 calls were 4 1/2 bid, Offered at 4 7/8. A total of 6,183 contracts traded at this strike on Friday with a total of 24,060 contracts on this strike outstanding. The FEB 85's have a theoretical value of 4.739, a delta of .483 (equivalent to owning 48.3 shares of Dell at the current stock price and time to expiration) and currently trade at a volatility of 60.7. The Dell FEB 90 calls were 2 5/8 bid, offered at 2 3/4. A total of 2,130 contracts traded at this strike on Friday with a total of 18,428 contracts on this strike outstanding. The FEB 90's have a theoretical value of 2.984, a delta of .350 (equivalent to owning 35.0 shares of Dell at the current stock price and time to expiration) and currently trade at a volatility of 57.7. What does all of this suggest? To a pure options player, the Feb 85's are fairly valued (trade approximately at their theoretical value) and the Feb 90's are undervalued (trade below their theoretical value). A conservative options player would buy the Feb 85 calls and sell the Feb 90 calls in a one to one ratio. If the stock closed above 90 at February expiration, the trader would realize a 500 on each call. The actual gain, however would be $500 minus the cost of the Feb 85 call plus the premium realized from the sale of the Feb 90 call. IMO, it's still a great return on investment. Of course, there are those who would argue that selling calls on any Dell position is an apocryphal investment strategy. Like every investment strategy (reading tea leaves, computing the co-variance of the spin rate of Arcturus IV, and analyzing the difference between high and low tides provided by a host of charting services), a pure options strategy has its time and place. I own the Feb 80's in size. Could kick myself for not selling the Feb 95's or the Feb 100's in the last run-up. I'm sure I'll have the opportunity again. I have no problem (but I do - greed is the problem) locking in a profit for thirty days until expiration. Hope this helps. Enjoy reading all the informative remarks offered by the Dell threaders. Mark