Ascend Communications (ASND) Message Board

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Technology Stocks : Ascend Communications (ASND)

ASND 202.23

-4.2%

Dec 2 3:59 PM EST

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To: Nazbuster who wrote (16353)	10/4/1997 7:57:00 PM
From: Glenn D. Rudolph	of 61433

Daniel, I just want you to know I have answered this twice but was downloading Internet Explorer in the background and received a system error before I could hit submit. One more time<G> 1. How do you decide when to unload a successful option purchase or buy/cancel a successful uncovered option sale? I am assuming you are referring to owning puts or calls. I set a target high on the underlying security or a target low depending upon a call or put and sell my postion when the underlying security hits the target. I often leave money on the table. I cannot guees the very top or very bottom but with the leverage of an option, the profit is still good. The only time I change a target price is when there is a fundamental change in the underlying security and I re-evaluate. 2. What factors influence you the most for closing out your position? My most common position is selling naked puts. I plan on having the security out of the money at expiration and I let the put expire without closing. Everything does not always go as planned. If the underlying security is in the money at expiration, I close the put at 3:55 PM the Friday prior to expiration and sell the same strike put the next month out. Assuming the strike price is reasonably close, I profit on the time premium. If the underlying security is way in the money, I may sell more puts for the next month at a lower strike price. There is no hard rule here becuase fundamentals of the company come into play. 3. What are your thoughts regarding when to conclude you went the wrong way? If the loss on the option hits 25%, I close the position and move on. I only take a 15% loss on a security long position but since options are levergage, I do go to 25%. I sold puts on Ascend a while back that were 50 strike price. I rolled them out with twice as many puts. The 50s were more than a 25% loss. The 40s are not a 25% loss due to the time premium. Does that make sense. If I felt Ascend had no future, I would move to a different underlying company. I still feel the market is undervaluating Ascend by quite a bit. I will know better after the conference calls and seeing the back log. Glenn

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