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Strategies & Market Trends : Options
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To: RocketMan who wrote (382)12/30/1999 4:06:00 PM
From: StockHawk  Read Replies (2) of 8096
 
>>Assuming the stock is still close to its high, is it best to sell the common and buy the leaps at that point, or is it best to wait for a correction before selling the common to buy the leaps? There was a discussion on this in the Q
thread, and it seems the more experienced options people favored waiting for a correction, which seemed
counter-intuitive to me. <<

When you buy a LEAP you are, of course, paying a premium. Many factors effect that premium. One of those factors may be the recent history of the stock. A rapidly rising stock tends to have higher premiums, while in a correction premiums may moderate. So the idea is that although you will get less for your stock if you sell during a correction, the money you get may nevertheless allow you to buy more LEAPS.

StockHawk
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