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Mark, I never bet against what I consider the underlying cycle in tech
stocks, so I wouldn't buy calls on USRX for a short term pop. But I
do lower my put exposure by holding a 1/3 position when I think a
suckers' rally is due. My style is to swing for homeruns and ignore
the blips along the way except for trimming my sails a bit now and
then. The main thing is to have some puts or calls in place when the
mother of all moves takes place. Netscape is a good put stock, but,
like USRX, it may be due for a rally here. I never use stops on my
puts or calls. When I go into an option, I consider the money lost
right from the start. I never buy one where I don't expect a minimum
of a quadruple and I will let my losses run until close to expiration
day. Also, I do tend to roll my profits. I don't like to hold
intrinsic value in my options. So, with Micron at 19, I have already
rolled my 20, 25 and 30 strike price puts down to 17 1/2s and 15s.
I pocket the profits and keep in the puts for the downside. I never
play for less than a quadruple, though, and I would rather expire
worthless than take a 40-50% gain. The reason is that you need the
BIG winners to make up for the 100 percent losers that are inevitable.
Good luck, MB |
