Roger's 1997 Short Picks Message Board

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Strategies & Market Trends : Roger's 1997 Short Picks

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To: Pancho Villa who wrote (7754)	12/3/1997 5:12:00 PM
From: vegetarian	Read Replies (2) of 9285

>>With all due respect to people who use options activelly, I must say that people at SI seem to use options too much [and also trade too much]. IMO, options are expensive lottery tickets and should be used only in rare ocassions, if at all.<< In general I agree that options, if used for leveraging profits can be quite risky, however they are a good idea in certain situations. These situations are when you predict that a stock will move but -it is in a price range that a takeover is possible, you are better off with puts than a short -the float is small and there are no shares to short (it is risky in this case) or you are concerned that the shares may be called back -you are speculating a takeover but company's fundamentals are not great or suspecting an earnings warning (calls better than a buy here) because you see too much call activity on the stock I am sure there are other circumstances which more experienced folks can point out but if options can be justified INSTEAD of a buy/sell and not leveraging it, it may not be such a bad idea.

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