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Technology Stocks : SDL, Inc. [Nasdaq: SDLI]

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To: Kayaker who wrote (3086)	10/20/2000 1:38:45 PM
From: Wyätt Gwyön	Read Replies (1) of 3951

Most of the option books I've looked at do not recommend buying deep ITM calls. While McMillan and others warn against being lulled into buying "cheap" calls far OTM, I have also read caution against buying deep ITM, where you tie up a lot of capital in a small number of calls, and effectively pay for the seller's insurance policy (see, for example, The New Options Market by Max G. Ansbacher. Hardcover (January 15, 2000), which is a nice supplement to McMillan and easier to read). Ansbacher makes a number of good points re: call-buying strategy, among which is: don't ever think of long calls, no matter how deep ITM, as a substitute for common. (I'm glad I didn't know about that a year ago when I was 100% QCOM calls!). One strategy is never "better" than another Many ways to skin a cat...as long as you keep some of the skin!

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