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Strategies & Market Trends : Tech Stock Options
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To: Nancy who wrote (31192)12/15/1997 12:40:00 AM
From: Tom Trader  Read Replies (2) of 58727
 
>>The only problem I see in the protective puts - first, they are not available at the much lower strike price you want.secondly, because of the volatility, and time frame, the costs are high enough when you add them up, it equals to you buy the stock at the then current price rather than at the bargain price you think. <<

Nancy, you make good and valid points

The available strikes would be an obvious limitation -- and I might have to settle for a higher strike price--like 25 for AMAT; the puts will be expensive but the comfort that it will offer in a down-trending market is important to me and if I buy the puts on a rally it will obviously be a bit cheaper -- also I intend selling covered calls/do a ratio-write which should lower my cost basis.

Look at the numbers and compute it out and you'll see what I mean--but it is all based on assumptions of course as to what the stock will do and so on.

Critical to this whole game-plan is when a recovery will occur, show severely prices will correct before they bottom and where prices will be a couple of years from now. But I am patient -- and I know that we are not looking at the end of civilization -- and down the line some of these stocks will look like great bargains at the prices they are now and when they bottom out. Like I said last week -- we all wait for lower prices to buy stocks and when the prices decline then we are afraid to buy--that is always the way it works out.

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