How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 483.50

+1.0%

Jan 7 3:59 PM EST

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To: taxman who wrote (38754)	2/29/2000 8:59:00 AM
From: rudedog	of 74651

taxman - good post on naked puts - I agree that the economics of selling puts versus selling calls are nearly identical. But one's view of the potential of the underlying is different... I use the following to determine what options plays to make, and have been moderately successful with this simple set of guidelines. 1) I believe the underlying stock will trade in a range, but investor sentiment is bullish - sell covered calls, the premiums will be high and if the stock range trades, I will not get called. 2) I believe the underlying stock will range trade but investor sentiment is bearish - sell puts, premiums are up and if the stock stays in the range the underlying will not be put to me. 3) I believe the stock will go up into a new range, but investor sentiment is bearish - buy calls (maybe pay for the buy with a put sale). 4) I believe the underlying will continue to run up over time without a lot of pullback - buy the underlying. There are of course a lot of details to the options plays which this simple analysis ignores... but then I am sort of a simple guy when it comes to investing.

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