Would you mind sharing your opinion on buying November Dell calls? Do you think the COMDEX
show in Las Vegas(Nov 17-21) might give some boost to the tech stocks right before that Friday of
21st? If that's the case, would you buy them now or wait until that possible pull back in October?
I wouldn't buy November calls. You're paying a lot of premium during a time span when Dell may drop twice, in 2nd half of Sept and Oct. The shorter the lifespan of the option, the cheaper it is. The cheaper it is, the greater your potential for high returns. I would wait until the latter half of Oct to buy Nov calls. Buy Sept first, then sell before expiration, then wait for a possible decline in Sept, buy Oct calls then sell by the week of Intel's earnings report, then buy Nov calls at the end of Oct.
Here's one analysis of Oct: pcfn.com
Note that they are talking about a CRASH, which I also think is unlikely, but it probably still will decline in the second half of Oct and maybe Sept. Here is an excerpt from Money Magazine daily: History may also work against the markets in coming weeks.
Reuters reports today that September is historically the worst month of the year for U.S. stocks. What's worse, this October marks the 10th anniversary of the October 19, 1987, Black Monday crash. Note here that Sept is the worst month only because of the latter half of Sept, not the first half, and I have said this before, several times. That's why I wouldn't buy calls beyond Sept right now, UNLESS you want to buy LEAPS to reduce your short-term risk. This is certainly a good way to reduce your risk. NEVER PUT ALL OF YOUR MONEY IN SHORT-TERM OPTIONS, or even most of it! Just invest what you can truly afford to lose, because you may well lose it. |
