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

To: wlheatmoon who wrote (58494)	5/4/1999 2:23:00 PM
From: Cynic 2005	Read Replies (1) \| Respond to of 132070

Sneaky, aren't you? -g- As I thought and thought and thought, it seems likely that the deal will not have huge premium. Not because it make any fundamental sense, but because I had a huge position as of yesterday's close. -g- Here are some numbers you may want to consider for June, July 50 strike calls. [BTW, 2001 LEAPS for 50 don't make much sense to me unless of course you want to go long on JNJ. Deep ITM LEAPs, OTOH, make a lot of sense, though. And, I have 35s for 2000, FWIW.] If CNTO was offered $5 bil - all in stock, the take over price would be 61. If JNJ slips 5% CNTO will be approximately at 58. COnsidering contingencies and arbitrage slippage, you can get 57 for your shares or $7 for 50 strike price calls. Possibly this is the best case scenario. The worst case scenario: ~53/share (guess work) and with the slippage and all June 50/July 50 calls will be merely worthless. So, any price below 53 will be bad for your 50 strike calls. IMO. Here is what I did - I let go some of my greed. Cashed in 3/4 of all my June and July 50 calls for about 50% profit. Now that I took one hurdle out, who knows, the deal may be bigger than $5 bil.

To: wlheatmoon who wrote (58494)	5/4/1999 5:32:00 PM
From: Knighty Tin	Respond to of 132070

Mike, Given your parameters, the call sale looks like a layup. However, if you are wrong, here is what could happen. Somebody offers $80 and you have to deliver stock for $50 when the call holder, probably Mohan <g>, exercizes. Buying at $80 and delivering at $50 is a bummer. Of course, if the stock goes for less than $59, you make money, and less than $50, all the money. My worry would be that the risk outweighs the potential gain. If you know the situation well, that can still be a smart thing to do, but it is not a good general practice.