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Mark, I think Novell is a nice little company, but their margins are
never going to get better unless they get help from the Justice Dept.,
and that looks like a no go. Also, I think the stock is just too low
priced for a volatility play. You need huge percentage moves to make
either of those options come true. Of course, it is always a question
of price, so if they are cheap enough, why not? I don't have their
current prices in front of me. A little background on your second
question. There are a huge
number of option traders with big bucks who like to sell out of the
money options. Then, they use a technique where they sell more if the
stock goes against them in a ratio that gives them what they call a
neutral position. For example, they may sell 200 calls at 50 and if
it goes up, sell 350 at 55, and if it goes up, sell 500 at 60 and then
when the stock sinks back, they collect all these premiums. Most trade
near term options for eighths and quarters and occasional halves. So,
this is a legitimate and extremely popular strategy among the so-called
big boys. It is one that has the endorsement of the academic community
and every board of directors will approve it because you almost
always win. However, it is also one of the most butt-headed stupid
strategies in the world. And that is pulling my punches. -G-
More later,
as I fear the submit gremlin. MB |
