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Technology Stocks : 3Com Corporation (COMS)

COMS 0.00130

-18.8%

Nov 7 11:47 AM EST

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To: Carmine Cammarosano who wrote (10835)	11/26/1997 5:04:00 PM
From: Lost in New York	Read Replies (1) of 45548

How do you roll out calls...you can buy them back to close for a loss... "Rolling" is a way of trading options. If you want to get out of one option position and into another you can trade two different ways. You can sell one option and then buy the next or you can do it as a single transaction -- rolling it. You go to your broker and tell them you want to roll your Jan 35's (bid 3) out to July 35's (ask 6 7/8) at a limit of 3 5/8 which is a little inside the spread. You don't have to place a limit, but I always do on my trades. The person on the other side of the trade might do it cause there making money on both spreads. The couple of times I've done it with Fidelity I've asked for a limit 1/8 inside the spreads and the've improved the trade by another 1/16 or 1/8. You'll still pay two commissions however. Rolling is good because you eliminate the risk of the stock moving between the two trades. If the option prices were to go up 1/4 to 1/2 between the trades, it has just gotten around 10% more expensive. Add in the amount you save in spreads and you come out ahead by rolling the trade. Obviously if the option price moves the other way between trades you could gain by trading seprately, but you might not even make up the extra spread. There's a very good book on all the various aspects of trading options called Options As a Strategic Investment - by Lawrence G. McMillan Amazon has it at a much cheaper price than I paid for it. :) amazon.com Hopefully this wasn't too long winded. Dave

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