| I must disgaree with you. Owning calls rather than stock, especially this year, would have ben a very wise thing indeed. Instead of watchinga stcok drop 50%=90% in the blink of an eye, your loss of capital would have been limited very well by owning the calls. Where people go wrong, is that they take there pot of capital and use calls and puts to leverage that pot of capital. Example: You have enough money to buy 1000 shares of jdsu at 100 ($100,000). You could have spent $10,000 on JDSU calls and if you would have left the rest of the money in cash, you'd be out $10,000 rather than 60% or $60,000 had you held the jdsu stock. On the other hand, if you took that $90,000 and invested it in other tech stock calls, you probably are in the same position as you would have been had you held 10000 shares of jdsu (i.e., down a ton of money). Knowing how to handle your pot is key to winning with options. Unfortunately, since 1997-2000 was a great mo mo year and most optino players leveraged their pot, they probably lost 50%-90% of their pot this year. I made that mistake to a certain degree. Now, I have my core holdings but am gunshy to open new positions even though I hold out hope that the market will reach 3250-3500 by mid-Jan. |
