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Technology Stocks : Cymer (CYMI)
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To: Sorin A. David who wrote (14339)2/6/1998 11:56:00 PM
From: Matt Webster  Read Replies (1) of 25960
 
Sorin, I would not be selling options of any sort on this stock. Even selling covered calls is highly problematic. The near term premiums are too small to be protective in a new downcycle (test of lows). Selling naked calls on a stock like this for a fraction is insane. Selling naked calls deep out and buying naked calls nearer is extremely bullish. You are likely to get nothing, while making a maximum of 2.5 in your example.

I would pick a direction and construct an options position that protects you with near zero loss if you're wrong and rewards you with a 33-50% gain if you're right. The transaction costs require a $2-3000 purchase, but it's the most reasonable way to position oneself in a nosebleed, unstable market like this one.

Just my two cents,
Matt
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