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what a ton of fun!! in a post. Such a neat idea, including a comment on options.

I have to admit I am still struggling with a way to include debt in a DCF. Its not really helpful to deduct it from the net income in one lump sum, because it is not really money going out the door in the current year and unavailable to shareholders. And the current years rent is deducted as operating expense so subtracting it again would not be right. Any ideas?

I don't have any good ideas but it seems to me it's been proven over and over that leases are not debt. Wet Seal is just the latest proof. Leases are more fluid than debt, they get re-negotiated with some frequency. Leases are a fixed operating expense and are included in the net income figure and you wouldn't want to account for the leases twice. I know there are lots of similarities between leases and debt but it always makes me uncomfortable to call an orange and apple because the orange is extra red and has an apple shape. We do that in medicine alot... and it'll get you in trouble if you forget you're dealing with similar things and NOT identical things.

The Jan06 25 put OTOH looks like it could be sold for some decent return if the higher last price of $2.10 were to hold up until the market opens. Might be worth looking at.Some of the other puts look like they might be worth looking at too.

the Jan06 25 put is currently bid at 2.20 and ask at 2.35 for an implied vol of 42% on the ask. The Jan06 25 put is ask at 3.00 so you could set up that syn long for 80cents out of pcoket. Considering that AEOS is bid around 25.50 in the pre-market, it looks like you'd pay a 30cent premium for the syn long... not a bad deal if you wanted to buy AEOS.

thanks for a really nice post
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