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Strategies & Market Trends : Options
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To: RocketMan who wrote (7106)5/1/2000 10:21:00 AM
From: edamo  Read Replies (2) of 8096
 
rm..."valid arguments for dim....safety not one of them"

au contraire...intrinsic value means quite a bit...even gives you the ability to write covered calls against at a strike higher then your strike plus premium paid...this luxury is not available with otm, until they become atm or itm...

you miss the whole point of options....too many believe it is okay to "gamble"....might as well go to a casino, at least they comp you with rooms,food and drinks....

ditm is used as a viable stock replacement...your statement that on a 50% pullback you only lose 50% with common....and you can hold on...do you infer that you lose more then 50% with a ditm? do you not have a cost basis fairly close to the common?

let's address safety

a ditm if purchased prudently allows you to exercise with a minimum premium to the current market...this is your safety.....

it's obvious that your options strategy is not one of portfolio enhancement....good for you, but try to temper the comments so others would not equate "cheap" for "better"....the object is not to "gamble" or "be willing to lose" with options...although it appears that this is the posture taken by many inexperienced option "investors?"

you as many have been successful with otm's in a tremendous bull run....don't believe it can always be this way....
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