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April put options with a strike price of 3.00 cost 1.60. This means that CPN will only have to fall another to below 1.40 to make these options worth something. Look for a good ruling from the judge to lift the stock price and depress the options. Even with a good ruling from the judge I don't believe Calpine has a way out.

The judge has not said which way he will rule in the case, but he indicated he would be reluctant to issue a decision that would force Calpine into bankruptcy.

If he rules against the company, Strine suggested he would be inclined to fashion a remedy that would give Calpine a reasonable period of time to come to terms with the two tiers of secured bonds that sit near the top of Calpine's $17 billion debt load.

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