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Politics : Formerly About Applied Materials

AMAT 327.01

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Jan 16 9:30 AM EST

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To: Tito L. Nisperos Jr. who wrote (11054)	11/14/1997 11:40:00 PM
From: Carl H. Gotsch	Read Replies (1) of 70976

Tito: In reading your informative LEAPS posts, one can overlook the somewhat cavalier treatment of the facts that: (1) options are about leverage, up AND down, and hence have a different risk profile than the underlying stock, and (2) investors need to work out the arithmetic and consider carefully the risk-reward ratios of particular options to make sure they are comfortable with what the investment implies. These points have been made previously by others and the sophisticated readers of this thread will fill in the gaps themselves. But when you decide to put your marriage at risk, I feel duty-bound to suggest that you re-read Chapter 2 of McMillian on Options to remind yourself of what can happen if things don't go the way you have planned! <g> --Carl P.S. IMO, readers interested in gaining a better understanding of options can do no better than downloading and studying the Options Toolkit from the Chicago Board Options Exchange. This is also a convenient site to look up option symbols and quotes for regular and LEAP options. cboe.com

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