Finfan,
Re. favorite INTC LEAPS plays
I have posted a number of times on this subject at the various threads such as LU, MSFT and Intel. Thus, instead of being truly redundant, I shall try to find the old posts and share with you.
In general, I don't buy deep-in-the-money calls and Jan98ers are too short-term for me. The strike prices for my LEAPS calls are usually selected in such a way that 9-12 months before their expiry, these calls will have become in-the-money or at least at-the-money. One important consideration is an appropriate balance between leverage and risk. And, in selecting the strikes, you really wouldn't want to miss the "sweet spot" of a option--meaning the area where the increase of delta is the greatest--usually a couple of notches higher than the underlying stock price and going into the money.
Currently I own a bunch of VNLACs (99, strike 102.5) and VNLADs (99, strike 97.5). These were bought in March/April when I assumed INTC would be at least $100 by January 1998. Needless, this assumption has turned out to be too conservative. At the time, however, the future competitive scene wasn't all that clear and I felt it would be more prudent to be on the conservative side.
Hope this helps.
Ibexx
PS: I use LEAPS trades as hedges for my long positions. Other folks who don't own the commons might opt for the deep-in-the-money LEAPS calls as an alternative to owning the shares. |
