Presstek -- Stock of the Decade?? Message Board

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Technology Stocks : Presstek -- Stock of the Decade??

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Sep 29 10:16 AM EST

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To: Hugh W. who wrote (729)	7/11/1996 11:12:00 PM
From: Richard F. Hubbell	of 11098

Hi Hugh - I think you are paying too much for insurance. Your strategy is fine, provided it stays in the 60-80 range - but I know you paid a bundle for the long term calls and puts at 70. The problem there is that they have a high volatility and time premium. The other thing is that you bought them. It is better to work with somelse's money (sell put and sell call) and then you get to pocket that rapidly evaporating time and volatility premium (if your scenario of the 60-80 range stays true). This is better than having your money evaporate in those options that you are long. I understand that the put you sell will increase in value when the stock drops, and that this will diminish your profit. The thing is, when you are short, the shares move 1-1 with the market, but an out of the money put with 1 week to go till expiration will move far less than 1-1, if the stock dropped $5 the put might increase in value 50 cents. If you get cleared for level 3 option trading then you can 'go naked' so that you don't have to buy the put back (at the high spread) before you buy-to-cover the short. So the way you would set your self up would be: Sell puts and calls at a strike price of 70 with say an expiration in Oct. Then do your buying and shorting in the same 60-80 range. Remember though that this will not give you as much protection as you have now, BUT you will be making money on the options as they erode to zero with time. Just be sure to use stop-loss orders to protect yourself when you buy or you short the stock. Also you will need to maintain a reserve with the broker to cover the times that you are naked on the short options. More on that later. It is just a suggestion. How did you make out today? It didn't get up too high. Are you holding or did you sell? Regards, RH

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