America On-Line: will it survive ...? Message Board

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Technology Stocks : America On-Line: will it survive ...?

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To: James F. Hopkins who wrote (3980)	7/14/1997 1:32:00 AM
From: CLAUDE JOHNSON	of 13594

Jim, Response to last post: <<at my age I don't intend move fixed income type money into the equity account to the amount it would take to get qualified>> Agreed ... My broker has two thinks right in life. The first is: "How do you get $1 million?" "Give your broker $2 million!" The second is to invest your age in bonds. If you're 60 then 60% should be in fixed income securities of high quality ... no less! I've got many years to recoup a loss from an aggressive strategy. <<You seemed to agree with me on one point but I afraid you didn't get the picture, perhaps I didn't paint it clear enough. The hidden spread is the way the specalist ...>> I got the point ... I didn't necessarily agree. Spreads change all the time. I look at the price in and do my best to project the price out. Since I'm mostly 'in the money', the spread doesn't concern me. If I'm fighting over a 1/4 of a point ... I must be in the wrong contract for my liking. I understand that this is crucial to your strategy. NO MONEY TO MAKE ON AOL RIGHT NOW THOUGH WITH THAT STRATEGY. The way I read these high put premiums today is that everyone and his cousin are either buying 'em to speculate or to protect. ITS GOTTA GO SOON ... A TRUE VOLCANO IS A COMIN'!!! <<it's the cheaper and only ties up the call money, the calls themself become and remain my collateral no matter if the stock goes to heaven. If you sell both positions then both of them require enough in the account to pick up the stock, or to furnish it ...>> Not true my friend. The formula for margin req. to sell an option is the greater of A) 15% of the strike x the controlling shares or b)20% (same formula less the out of the money points). I must admit ignorance regarding the additional requirements for shorting if the stock does indeed go up. Will the calls act as 'covering' for this? I've never shorted, and I probably never will. When you have a big fish on the line ... there is a real risk that the stock will be demanded back by its owner ... true or false? This could put a damper on profits. Never really looked too closely at shorting as I've never the inclination since puts exist. I understand there are points where it is better. Did you agree with me that your straddle lacks any upward return ... that it is truly merely a protected bear position unless you choose to leg out of the short on the upside?

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