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Technology Stocks : PairGain Technologies
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To: Ralph E. Daugherty who wrote (19261)1/23/1998 5:42:00 PM
From: Gary Korn  Read Replies (1) of 36349
 
Still hanging n here. Haven't posted in a while, so thought I'd let you know that I bought 5 Feb20 call contracts on Pair. It's my first time to gamble with options. Paid 1.125. Also still hanging long.

Ralph,

Instead of buying calls (80% of which expire worthless), think about selling puts if you are bullish on the stock. I learned this tactic from Glenn Rudolph, to whom I am deeply indebted.

For example, I recently sold Feb 17 1/2 puts for about 1.5 points. If at expiration PAIR is anywhere above 16, that translates into a profit. To be sure, the profit is capped at 1.5. The benefit of selling a put is that you take in time premium. Unlike a call, where you pay out time premium. Given the limited upside, though, you might want to both (1) sell puts (to cover minor gains) and own the stock outright (to cover larger gains). But the total that you own should not exceed your exposure tolerance assuming that all the position was in raw stock.

Gary Korn
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