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Strategies & Market Trends : Tech Stock Options

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To: Sundar Rajan who wrote (27527)	10/31/1997 10:00:00 AM
From: Tom Trader	Read Replies (2) of 58727

Good morning Sundar--re your posting to me >>Hope I survive this sale of puts. I am willing to take a loss but not a 20point one at this stage. Also by nov 3rd week the market may resume its upward trend or atleast give me a chance to exit during the next rally<< This is one of the biggest mistakes that traders make--which is to say that "I am willing to take a loss but not a loss of as much as 20 points". After all, you have no assurance that the loss is not likely to increase. In the case of TXN--decide whether that TXN is good value at its present price--if it is then you would want to hold on to it -- if it is not then the extent of your current loss has nothing to do with whether you should continue to hold the stock. Also factor into your considerations what you think that the market is going to do near term--the reality is that when the market goes down, almost all stocks decline --some more than others. There are some strategies that you can use but I am reluctant to suggest them because there is risk and I don't know anything about your personal position and how well you are able to tolerate the risk. >>Also, what would you do if you have several long option positions 3 to 6 six months out. Would you sell and take the loss now or wait to see if the positions can be salvaged somewhat. I have IBM Jan 95's bought at a higher price and need IBM to go up to 108 or so? I am tempted to buy more now and average down. Similarly INTC Jan 90, 95's as well and CPQ Jan 70's<< How you should proceed with these calls is a function in part of whether you are in a financial position to lose all your money and your outlook for the market before the options expire. You do have the benefit of about 10 weeks to expiry in the case of the January options and a lot can happen in that period--you may want to use rallies to sell covered calls against a nearby month in an effort to pull in premium. But if you do that -- do so only with the recognition of the implications of taking such a step. Again as always -- you need a plan as to why and when you will enter and when you will exit the trade. >>could you give me your EMAIL address please? mine is sundar_rajan@hotmail.com<< Sundar, I prefer to keep exchanges confined to SI--I used to have my e-mail address on my profile but got inundated with e-mail from SI participants that I just could not handle. Besides the exchange of views on SI gives everyone the benefit of what is said. hope you understand. Regards

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