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Technology Stocks : Newbridge Networks

NN 16.12

+1.6%

Dec 8 3:59 PM EST

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To: Rick Escher who wrote (3698)	3/17/1998 11:13:00 AM
From: Dennis J.	Read Replies (1) of 18016

Rick, suggest you visit the SI thread "Tom Dorsey Q & A", for a good discussion on how to use options safely. They do work. He will guide you to buying in-the-money options with lots of time-value (4-6 months, or more), and using them as a proxy for owning the stock. I believe they are safer than buying on 50% margin. An NN example: Buy Jun 25's @ 6 3/4 (NN at 30-30.5), ride it to 35. Then create a bull spread by selling the Jun 35's for ~3. Ride to expiration and close out. If stock closes at 32 at exp., you get 7 + 3 = 10, but 10 + 3 = 13 if NN is 35 or higher at expiration (15 + 3 -5 =13 if NN at 40). Check your broker, as some don't allow spreading. Options also let you own several positions with limited capital, and the usual 1/4 to 1/2 spread is similar to trading many OTC stocks.

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