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Subject:  Re: RNWK as Gorilla Date:  6/23/2000  10:38 PM
Author:  SlyAce Number:  3137 of 8783


Thanks for doing the work re finding the official word from the CBOE. To answer your question, yes, if you paid $22 for a QCOM Jan02 $80 LEAPS, then you lose money on any tender offer of less than $102, and you lose if all if under $80.

I found the following CBOE statement to be of interest:

As a general rule, adjustments are not made for tender offers or exchange offers, whether by the
issuer or a third party, and whether for cash, securities (including issuer securities), or other property. This presents a risk for writers of put options, because a successful tender offer or
exchange offer (whether by the issuer or by a third party) may have a significant effect on the market value of the security that the put writers would be obligated to purchase if the put options are
exercised after the expiration of the offer.

So, as far as call holders go, it does not really matter if the offer is in cash or in NOK stock; i.e., if the offer is x number of shares of NOK stock for each share of QCOM stock, a call holder would just exercise early (hence all that language about how European style options get treated) in order to be treated as a QCOM shareholder in order to receive the NOK shares. So long as the value of the NOK offer is worth more than the strike price, call holders would be better of exercising.

I ended up selling my LEAPS and buying deep in the money July calls, my thinking being that if the rumor is true, I benefit via the calls and if it is false, the calls still have value as a result of being deep in the money; I then sell the calls and buy back the LEAPS. Most of my QCOM is in actual shares which, of course, I left alone.

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