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Correction: The <FONT face="Courier New"
size=3>cash in lieu of 0.30422 share of Travelers Property Casualty Corp. Class
A ("TAP.A") Common Stock; plus cash in lieu of 0.84326 share of Travelers
Property Casualty Corp. Class B will be a lot more than what I said since TAP.A
is at is at $14.40 and B is at 14.44. Sorry, but it will be around $16.20
per contract.
<FONT face="Courier New"
size=3>
Good luck and good
trading
<FONT face="Courier New"
size=3>
Ray
Raffurty
<BLOCKQUOTE
>
----- Original Message -----
<DIV
>From:
Ray
Raffurty
To: <A title=jvc689@xxxxxxx
href="">John Cappello ; <A
title=realtraders@xxxxxxxxxxxxxxx
href="">realtraders@xxxxxxxxxxxxxxx
Cc: <A title=MedianLine@xxxxxxxxxxxxxxx
href="">MedianLine@xxxxxxxxxxxxxxx
Sent: Saturday, March 08, 2003 5:40
PM
Subject: [RT] Re: Fedback-This Week's
Most Unusual Covered Call
Hi John,If you purchased 100 shares of C and sold
1CLTCC call your are NOTcompletely covered. In August of 2002
Citigroup spun off it's TravelersInsurance division <A
href="">http://www.citi.com/citigroup/press/020820a.htm
anddistributed the Traveler shares to owners of Citigroup stock in the
ratiodescribed at<A
href="">http://www.cboe.com/common/pageviewer.asp?file=02-454.doc&dir=ttstocksm&head=stock%20splits%20%26%20mergers&sec=5Since
options, including the March 15 CCC calls, where trading at the timethose
contracts had to be adjusted to include the shares distributed and
theoption symbols where changed to as the LT thus CLTCC is a
nonconformingoption. At the time of the distribution a new series
was created foroptions sold after that date without the LT symbol to
indicate 100 shares ofCitigroup only. In other words if you owned
100 shares of C in early August2002 and sold (1) 15 CCC call you would be
required to deliver both the 100Citigroup shares PLUS the shares of
Travelers you received, if exercised,and the symbol was changer to
CLTCC. After the distribution date if youpurchased 100 shares of C
and sold 1 CCC 15 call you would be covered. Asfar as I know the
unusual option symbol is always the nonconforming one.If you look at
the attached chart you will see that in every case the optionwith the LT
designation is trading at a higher bid and ask for the samestrike than the
option without the LT. This occurs because the value of theoptions
are determined by adding the value of the various Travelers sharesto the
100 Citigroup shares.I don't what Smith Barney told you but CLTCC is a
15 strike, it's just formore than 100 shares (nonconforming). If you
go to the OptionXpress website and go to the calls only option chain you
can check a box to show thenonconforming options. If the box is
checked the LT series shows and if itis not checked they don't
show.I believe the quote you got over the week end on CCC was
erroneous. Theremay not even be a market in that option currently
(in is no longer showingup). It is possible that the data from which
the various option chains arecreated had defaulted to an old quote when it
found no new prices. Also,when you use a website to search for
option yielding a high % on coveredcalls you must be very careful.
They often do not screen out nonconformingoptions but calculate the % gain
based on 100 shares!!!!!!!!!!!!!!!!!!! Ihave been burned this way
and learned to check the CBOE's web site whensomething looks to
good.If you entered an order to sell CCC, I would question why your
brokersubstituted the nonconforming CLTCC and demand it be undone.
He should haverejected the order or given you the price on CCC. If,
however, you enteredthe order to sell CLTCC you need to either close the
trade before expirationor plan to purchase the various Traveler's shares
required to be covered(more commissions). In this case, perhaps your
kindly old broker will undothe trade..., NOT. You can always do
nothing, but you will be shortTravelers on 2/24/03 after the options are
exercised. You can then buy toclose the short, but the market has a
way of moving to make this the worstpossible outcome, not to mention
additional commissions.The short will be: 4 shares of
Travelers Property Casualty Corp. Class A("TAP.A") Common Stock; plus 8
shares of Travelers Property Casualty Corp.Class B ("TAP.B") Common Stock;
plus cash in lieu of 0.30422 share ofTravelers Property Casualty Corp.
Class A ("TAP.A") Common Stock; plus cashin lieu of 0.84326 share of
Travelers Property Casualty Corp. Class B("TAP.B") Common
Stock.Also notice that there are 2 "cash in lieu of" components.
This means youwill need to pay out that cash to the option holder ($1.15
per contract).This cash is probably to adjust for fractional shares that
wheredistributed, but which could not be accounted for otherwise.I
think the odds are against you on this and you will be lucky if you
onlytake a small loss. Unfortunately the market does not hand out
money thisway. Occasional there will be small discrepancies in
option price to stockprice, pennies or less. Then professionals will
move quickly on volume andlow commissions to close the
discrepancy.Good luck and good trading,Ray
Raffurty----- Original Message -----From: "John Cappello"
<jvc689@xxxxxxx>To: "Ray Raffurty" <r.raffurty@xxxxxxxx>;
<realtraders@xxxxxxxxxxxxxxx>Cc:
<MedianLine@xxxxxxxxxxxxxxx>Sent: Monday, March 10, 2003 2:07
PMSubject: Fedback-This Week's Most Unusual Covered Call>
Dear Ray,>> I just did a double check with Smith Barney and the
correct symbol> for the $15 strike price is CLTCC.... which is what I
sold. Options> Express also confirms this. The other designations just
further> describe the Travelers acquisition from last year...and have
nothing> to do with pricing other than history.>> When I
first looked at this trade, the $17.50 strike price was in the> profit
mode to sell the call and buy the stock...that is now close to>
parity.>> Hope this helps.>>
Sincerely,>> John>>>>>
------------------ Reply Separator --------------------> Originally
From: "Ray Raffurty" <r.raffurty@xxxxxxxx>> Subject: Re: [RT]
This Week's Most Unusual Covered Call> Date: 03/08/2003
06:54am>>> [Attachment]>To
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