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Technology Stocks : How high will Microsoft fly?
MSFT 510.37+1.4%Nov 14 9:30 AM EST
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To: John F. Dowd who wrote (24923)6/25/1999 9:26:00 AM
From: t2  Read Replies (1) of 74651
 
You must therefore think that the market is going to move upward rather rapidly. The fact that the price is so "low: is that the volatility portion of same has diminished and therefore the market feels that there will not be any explosive upward movement in the stock. If the market is right then selling out of the money calls nets one a premium as they expire worthless. By your response you seem to endorse the concept that it is not worth the risk as the MSFT will rise rapidly and result in your calls working against

This is your response to taxman but i would like to point out that due to the low volatility in MSFT options, it may be worth taking an aggressive call buying position.

If the volatility was high, one would get good money by selling covered calls in the process of hedging their long bets in the stock.

My reasoning is that no one really knows where the market will go. If the market players knew, it would already be there! If people really felt that the market is going down, it should be there this instant.
To me low volatility or cheap options is a good buying opportunity and high volatility is a good time to sell covered calls or even go short calls. However, there is no rule and the market could fool you.
After several days of selloffs and the volatility remaining low one would expect that the volatility increases or the market will go up.

I think i am starting to get confused after putting my "logic" into words. Therefore, i need to stop here.
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