Monday, April 14, 1997
Cephalon (CEPH) has cooked a deal to buy
call options covering 2.5 million of its own shares from SBC Warburg in order
to participate in the potential for near-term upticks in the stock. The company
will issue up to 500,000 shares of its common - worth $9.7 million at Friday's
close of $19.375 - to pay for the options.
A call grants the buyer
the right to acquire shares at fixed prices. If the shares don't hit the
predetermined strike prices over the term of the option, the buyer doesn't
exercise the option because the stock can be purchased in the market at a
cheaper price. The option retires worthless and the buyer loses the premium.