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Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: Glenn D. Rudolph who wrote (60085)	2/22/1999 6:08:00 PM
From: Alok Sinha	Read Replies (1) \| Respond to of 61433

I am considering doing an option straddle using deep in the money puts and calls on LU and ASND to take advantage of the arb spread. Tell me what you think about it Sell 10 ASND Jun 95 Puts for $20 (currently at 19 7/8 - 20 1/4) Sell 8 LU July 80 Calls for $31 1/2 (currrently 31 - 32). Lucent does not have June options. Total premium 201000+31.5800 = 45,200 Net premium = (45200 - (106-80)800 - (95-80)1000) = $9,400. Assuming LU price stays above 80 in June at the time of merger close, effectively 10*82.5 or 825 shares of LU will be assigned on the put contract (long position), for which the 8 call contracts become covered calls. (I think 25 shares remain unhedged). The premium differential could be used to buy out of money puts to offset some risk of the deal not going through. Does anybody have a feel for the maintainence requirement on the naked puts and calls. Regards Alok