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Technology Stocks : America On-Line: will it survive ...?
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To: Muizz M. Kheraj who wrote (5456)11/5/1997 1:31:00 PM
From: kajtek  Read Replies (1) of 13594
 
Muizz, if you see any profit take the money out as soon as possible.
What happens with options before earning is that implied volatility increases and just after earnings are anounced they drop so the options drop as well. I got burned this way twice. I held my calls and even with better earnings then predicted and rise of the stock price my calls did not appreciate much. There have to be a big stock price movement to move option price up. This is specially true when there is a rally just before earnings.

I have Aol nov85c that I bought at 1.5 and Nov65p bought at 2.
My gain on calls ofsets loss on puts.
What I am going to do is to sell calls today as I made money of them and have to take profit. I then will buy some cheap puts maybe nov65p.

If earnings are great my puts are worthless but I will still be on positive side. I will miss some money but profit is a profit.
If earnings are so so and price stays the same or just a little up then my nov85 calls will not be much more worth then today and may be even less.

If earnings are disapointing then my puts, you know I am a bear anyway. I bought Nov85c just for protection of my puts and frankly did not expect to see them that high.
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