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Technology Stocks : America On-Line: will it survive ...?
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To: James F. Hopkins who wrote (3744)7/1/1997
From: CLAUDE JOHNSON   of 13594
 
Jim,
I was on the floor with laughter at your comment:

<. At my age it would be a mess
any way if it worked; I'd be kicking my ass for not having learned
it before. <G>>

I almost 'averaged up' as you call it on AOL. Some of the aggressive strategies have you averaging up buy selling the current position for a profit and buying twice as many of the next strike (as long as no further debit). This is aggressive as it takes your whole investment plus profits and rolls it up in the hopes of generating Huge gains! If you know (I mean feel it deep down in your gut as well as with the analytics) that the direction will continue, or at least, that, before expiration, that the stock will head downward, this position will pay off in spades. I thought about selling the 65's and getting into the 55's this way. You know the AOL #'s and the impact better than I ... if I dropped the 65's and picked up 3.5 of the 55's for each 65 and the stock dropped to 50?!?!?!?!?! WHoa ... who's going to pust the wheelbarrow ?

Caveat for you ... You have a deep sense of market timing in that you want to be lower than the other guys. This strategy obviously runs against your vibes here. I don't, and 'the books' don't, necessarily share this strategy. In fact ... it goes out the window on in the money options close to expiration. I really don't see the point of 'averaging up' options that are still out of the money, or options that are at the money. In the money to in the money is great. In the money to slightly out of the money pays a little extra premium, but may prove acceptable. Your thoughts?
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