(1) Best play for the AM if you were selling puts what play
(2) Buying LEAPS in AM - best play - are they prohibitively expensive at this point?
Hi Jill: these two questions from Steve:
1. Best play for put:
QCOM, JDSU had big runups yesterday, hence I would consider them overbought. Note that I do not mean overvalued, just overbought. Therefore, if I want to sell puts, I will not sell near term expiration (jan or feb), but further months. notice also about feb for qcom, shareholder's meeting, earnings report; hence volatility.
i would go to april expiry and otm strike prices. better less premium but more likely to expire worthless
2. if you are talking about qcom LEAPS, jan02/500, it does seem expensive, doesn't it? that is until you divide that by 4. You get strike price + 196 premium = 696, now if you divide by 4, it becomes 174. If in two years qcom cannot reach that level, then, it must be that china had chosen tdma.
finally, always words of caution: watch your margin, watch your margin: close the position before expiry if those naked options are almost worthless. you can then roll them into higher strike price with fewer number of contracts.
best regards
paul |
