Electric, re: IBM calls,
Again, been there, done that. Couldn't imagine IBM staying below 102-103 & loaded up on 100/105 calls for last few expirations when the stock dipped to 100-101 - felt like a very smart investor since IBM would soon be back around 105-107 (no problem if it's going to 125+ by year end right?). Just amazed me to see the stock dragged below 100 just for expiration. What's the probability of that happening again? Historical didn't give me a pattern for this type of "kill the calls" dip so I did it again - great values with the stock around 100-102 again & everyone calling for $110. Fool me once, shame on you, fool me twice, shame on me; I was humbled once again as the stock dipped at expiry to leave calls worthless (esp. 105s).
I'm glad about your friend's confidence in IBM. My friend at INTC was positive it would be nearing $125 now. hmmmmmm.
So, Electric, enough of this account - just beware (as I'm sure you are). Stuff happens in Asia, rumors fly, sox drops because some knucklehead predicts PC's will drop off as people go back to typewriters - In this market people seem to be looking for excuses to sell. Nobody seems comfortable with Dow8000 and it will take some getting used to before it moves decisively higher - opts are very tough plays when markets or stocks are establishing bases.
For what its worth, my advice is just don't buy Nov or even Dec calls when you could be giving that money to charity instead. I don't heed my own advice since I bought some Nov (and Jan) at around 103 but now it looks again like the same-ole-ship, different day & I'll probably be paying the piper.
Sorry for the long reply but I hope reporting not only of the successes but of some of the failures on this thread will make some of the new investors aware of some of the pitfalls esp. in this market.
Best of luck,
mark |
