|
PureBytes Links
Trading Reference Links
|
<x-html><!DOCTYPE HTML PUBLIC "-//W3C//DTD W3 HTML//EN">
<HTML><HEAD>
<META content=text/html;charset=iso-8859-1 http-equiv=Content-Type>
<STYLE></STYLE>
<META content='"MSHTML 5.00.0910.1309"' name=GENERATOR></HEAD>
<BODY bgColor=#ffffff>
<DIV>I will appreciate if someone will try to explain me the next
sentences.</DIV>
<DIV> </DIV>
<DIV>" the dow curb in "</DIV>
<DIV>"the dow curb out "</DIV>
<DIV> </DIV>
<DIV><FONT size=2>I hear those phrases in TV but cannot understand what does
mean!</FONT></DIV>
<DIV> </DIV>
<DIV>thanks a lot.</DIV>
<DIV> </DIV></BODY></HTML>
</x-html>From ???@??? Sun Jan 31 08:54:08 1999
Received: from list.listserver.com (198.68.191.15)
by mail05.rapidsite.net (RS ver 1.0.2) with SMTP id 17087
for <neal@xxxxxxxxxxxxx>; Sun, 31 Jan 1999 07:14:47 -0500 (EST)
Received: from localhost (localhost [127.0.0.1])
by accessone.com (8.8.5/8.8.5/PIH) with SMTP id EAA13152;
Sun, 31 Jan 1999 04:14:22 -0800 (PST)
Received: from beach.frankfurt.netsurf.de (root@xxxxxxxxxxxxxxxxxxxxxxxxxx [194.64.181.2])
by accessone.com (8.8.5/8.8.5/PIH) with ESMTP id EAA13014
for <realtraders@xxxxxxxxxxxxxx>; Sun, 31 Jan 1999 04:12:04 -0800 (PST)
Received: from default (deck-131.frankfurt.netsurf.de [194.64.181.163])
by beach.frankfurt.netsurf.de (8.8.5/8.8.5) with SMTP id NAA15427;
Sun, 31 Jan 1999 13:11:55 +0100 (MET)
Message-Id: <36B4490E.AFE@xxxxxxxxxxxxxxxxxxxx>
Date: Sun, 31 Jan 1999 07:14:06 -0500
Reply-To: Daniel.Goncharoff@xxxxxxxxxxxxxxxxxxxx
Sender: owner-realtraders@xxxxxxxxxxxxxx
From: TheGonch <Daniel.Goncharoff@xxxxxxxxxxxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Subject: Re: Stocks:Options - Netscape/AOL Put Option Trade
References: <007901be4cc3$fbdf4640$2188ddd1@xxxxxxx>
MIME-Version: 1.0
Content-Type: text/plain; charset=us-ascii
Content-Transfer-Encoding: 7bit
X-To: buchach@xxxxxxxxxx
X-Cc: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
X-Mailer: Mozilla 3.01 (Win95; I)
X-Listprocessor-Version: 8.1 -- ListProcessor(tm) by CREN
X-Loop-Detect: 1
X-UIDL: d03b2e0ff02aaffbe695d31fdba7bc92.0b
Hmmmm...sounds like you have all the qualifications necessary to work
for LTCM -- they tried the same trade with CIEN and TLAB.
The question is not just what the probability of the deal failing is,
but wher5e the stock prices would end up if it does fail. EG, NSCP could
fall back to the 20s. NSCP @24 is a 50 point drop, or 67.5%, which
implies a 12% probability of the deal breaking up. Are you prepared to
lose massively (short a put 45 points in the money) one out of every
eight trades like this? I wouldn't be...
To be fair, the actual arbitrage analysis is more complicated than that,
but the CIEN-TLAB break-up (and LTCM) should provide a lesson in the
dangers of 'easy' arbitrage.
>From one Dan to another
Dan Goncharoff
Daniel wrote:
>
> I think there is a substantial trade opportunity associated with
> option pricing on Netscape puts relative to AOL and would like to
> solicit comments from any of you that are experienced with selling
> naked puts. Netscape stock shares are currently selling at
> about a 8% discount to AOL shares - Friday's close gave AOL at 175,
> and Netscape at 73 (should be 78.75 based on the .45 factor). The
> discount presumably reflects the fear factor that the deal will not go
> through and Netscape stock will plummet, although I personally think
> this is an extremely low probability.
>
> I would be interested in any comments/feedback on the above.
>
> Dan
|