Tim, here's another Internet Index to consider...
GSTI Internet Index (GIN) as of July 31, 1998
AOL AMERICA ONLINE, INC.
27.13%
ATHM ATHOME CORP
10.85%
CHKPF CHECK POINT SOFTWARE
2.06%
CMGI CMG INFORMATION SVC
3.37%
EGRP E*TRADE GROUP
2.47%
NETA NETWORK ASSOCIATES
12.63%
NSCP NETSCAPE
6.71%
SDTI SECURITY DYNAMICS
1.28%
SE STERLING COMMERCE
8.35%
XCIT EXCITE, INC.
4.25%
YHOO YAHOO! INC.
20.91%
As you can see, AMZN is not in the pack but that's easily resolved. ($GIN was down 7.18% on 8/28, compared with 3.54% for NDX and 2.77% for COMPQ.)
I agree that stock and index option prices are *really* high (and subject to $VIX fluctuations). So for those of us unwilling to play
futures, we're forced to either: pay higher premiums; or, spread (and suffering margin requirements which reduce ROR). Given the margin issue, Jenna may have the right approach in using stock options -- even if the premiums are high.
You've mentioned OEX as an alternative to SPX. Currently, this has one of the highest IV's out there. One question to ask is: Do you feel that S&P100 will continue to outperform the broader market, or suffer from a "delayed reaction"? BTW, McMillan has recently highlighted that CBOE does not list OEX options 50pts otm. (My read is that it's more difficult for OEX writers to cover in a crash; of course, SPX options could be used as a hedge BUT we're talking about American v. Euro style contracts. Futures, anyone?) <g>
Since $VIX has become such a hot topic on this thread, I'd recommend acquiring the most recent The Option Strategist newsletter [V16, #6]. Interesting reading.
-Alan |
