Table: Collaring Bill Gates

Combining puts and calls on 100 shares of Microsoft (MSFT ) trading at $56.69*

BUY a put with a strike price of $50 expiring in January, 2003. Outlay: $775, plus $50 commission

SELL a call with a strike price of $75 expiring in January, 2003. Income: $837.50, less $50 commission

TOTAL COST: $37.50 (difference between $787.50 you got for the call minus the $825 for the put)

OUTCOMES: If the stock falls in the next 22 months, you exercise the put and collect $50 a share

-- If the stock rises to, say, $90 in the next 22 months, you must either sell the shares for $75 for a 32% profit or, if you want to keep the shares, you must buy back the call for $1,500 (100 times the $15 difference between the $75 strike price and the $90 market price)

-- If the stock stays between $50 and $75 for the next 22 months, the collar expires worthless, and you still own the stock

* As of Mar. 9, 2001

Data: CIBC Oppenheimer, BusinessWeek

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