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Strategies & Market Trends : Tech Stock Options

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To: Lee who wrote (58543)	12/14/1999 1:01:00 AM
From: Gersh Avery	Read Replies (1) of 58727

Hi Lee .. Thanks for the kind memories .. I keep this thread bookmarked .. just in case it starts to pick back up again ... man .. options .. I feel like I've been flushed down several drains on them .. I'm taking serious looks at futures now .. but .. A while back I did a paper trail of a progressive trade run. What I did was to buy a set of puts. I started the trail mid Oct of 98 on DELL. I wanted to have the trade go against me a couple of times so that I could build up a head of steam. The progression ran like this: Buy a starting set of puts .. say 3 or 4 of them. Whatever strike had a ask of <$1. When the next strike had dropped in value to be less than one dollar buy twice the number of puts on that strike. It got ridicules .. DELL had a run that didn't want to quit .. I think that I had twelve roll overs before my exit target was hit. BTW the exit target was a quad, which would have resulted in ~ 3x whatever money was put into the system. After the run finally ended I reversed the logic, and looked at the progressive method from the sellers standpoint. I was floored .. I was completely astounded by the degree that the deck is stacked against the buyer of options. An attorney that I know a short while ago talked to me and asked what I thought .. Her broker had convinced her to sell calls on some stock that she owned. The stock had risen above the strike and she received the call from her broker. It was before she went in to talk to him that she asked me for my two centavos .. I told her: keep the proceeds in cash in the account .. sell puts on the same stock until one day she is forced to buy it back. Once that takes place sell calls on it again until someone takes it away again .. then sell puts again. At some point, the net landed cost of the stock is zero. Once the net landed cost of the paper is zero she might wish to consider holding it. But not before .. All of the wealth of Wall Street has been built by selling stocks .. not holding them. And they sell them to people that they have convinced that the way to wealth is to buy and hold them forever. These were the victims of 1929, 1987 etc. and will be the victims the next time. Anyway .. it's the sellers that make the money. You might want to take a good hard look at the sell side. I'm sure that you've heard all this before .. the value of the dollar and what's going on with the bond still play important parts in what I trade where .. What brought about your shift in focus?

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