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Strategies & Market Trends : Option Spreads, Credit my Debit
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To: dealmakr who wrote (1450)5/27/2000 10:02:00 PM
From: KFE  Read Replies (1) of 2317
 
David,

It appears that some others may be reading this thread also. This is from this week's Barrons.

Option pros agree the liquidity myth is keeping option prices in the stratosphere. "It takes very little these days to bounce around the stock price anymore, and that's exacerbating volatility in options," says hedge-fund manager Ed Borgato. There are ways to play that. Borgato is taking advantage of high option premiums and selling what are known as "covered straddles," packaged around stocks he wants to own. "If you want to be a shareholder in Cisco, for example, but don't want to overpay, then engineer ownership of the stock at the price" you want -- in his case, at around 40 times earnings. It's called a "covered" straddle because the investor owns the stock, at the same time writing put and call options.

Regards,

Ken
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