On Leverage..
this is the post your are refrring too..
From: IQBAL LATIF Wednesday, Sep 8 1999 1:51PM ET
Reply # of 28731
You need to go back and look at my posts.. but leverage is buying calls I don't trade stock, I will never buy a internet stock at this price, however I will buy a call at certain levels on DOT and IIX, if Yhoo is 100 $ for 100 shares I need 10000 $'s, for me I would rather buy 1 call at strike price of 120 for say two to three months out, however I do it on a break of a major resistance or at a major support like 453 was my most recent entry... This is what I call leverage, highly speculative but equally rewarding however only 10% max of a new man's money should be allocated to these kind of games.. only 30 out of 100 trades are profitable in options that does not mean that 30% make money those who make money are 10% of the lot, so entry points and exits are very important so are MA's and directional macro economic view, if you have a compulsive bear embedded in you most of the time you will se the market skewed, all these gurus with biggest of respect have saince last three years blown mantras of scepticism towards the markets they continue to do so, for me I would rather be employing part of my capital but do it in a manner that when the fall comes I am impacted only with prem lost but if market roars up it is the most beneficial..
After leverage comes, look at my CSCO trade I have suppose 100 calls for 18000 $ I will either loose this moeny or make it double, but in them ena time I am sure that I will hedge my position if SPU 1336 is out I will hedge it with NDX or PSE out of the mone calls, if I am leveraged in a stock I would sell a index if the trade is not working my way, I live for another day, so would be my strategy for long positions I will on break of 1340 area establish 1420 sell and 1320 long option position, so all this is leverage and hedge I operate my thread a little hedge fund I try to explain it, but it will come slowly but keep asking questions like you have done, I will try my best to reply the little time I have...
Coug.. MSFT trade was as follows .. he had 450 shares, now he dosen't want to sell these shares as intelligently he realises that it is no fun, if he sells it, after Uncle Sam's capital gains he would need to see MSFT down to atleast 35% to make a entry, for US residents some time it is good to ride a correction than to sell at worst possible time and never get that entry back, so I advised him that if you want to do something sell 110's call (covered) and colect premiums so he is in the game for another 15% ride, now if you are worried about a fall buy Dec put . Now see what I am doing here, I am telling him to sell Jan's 110's to get some good prem than I tell him to buy 85's for say Nov less prem to be laid out,if we see a dip pre oct, he can see his puts double where he gets outof them buy back his calls of 110 at say 80 and still has his stock as well as insurance he collected from the long put plus the premium eorded due to fall in mSFT from 95 to 80 that is what I mean by two side of the market.. I know it is complex but that is how I do it and that is my earnest desire to popularise and train people if I will be successful on that 'jury' is still out.. I think of it why I want to do it, I knew that market is not about keeping few stocks and watching it every day I did that for long time now I am trying to make people familiar with what little I have learnt, may be it is too complicated but every one is a Sorros we are trying to use same technique.. |
