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Strategies & Market Trends : Tech Stock Options
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To: Esteban who wrote (32489)1/8/1998 12:45:00 PM
From: j g cordes  Read Replies (2) of 58727
 
Esteban.. the quick exit is the best solution 99.9% of the time. Its a mental trap to think otherwise, but seeing why its a trap is important.

We all study the charts, study the news releases and weigh the opportunity to get into a position. Take XYZ, its incredibly oversold and bouncing off the bottom of a bollinger a second time with good volume and you see 2000 calls made ten minutes before. Tempting as can be, because you been waiting for this fish to hit the bait and you know its a winner... so you buy.

Step back a bit... How many stocks have options? Maybe 5 thousand, maybe more? On any given day, your best pick might be only one good one in a universe of 40 to a 1000 other "great" picks. WE CAN'T SEE ALL THE GOOD PICKS ON ANY GIVEN DAY, BUT NEVER THINK BECAUSE YOU'VE GOT ONE, ITS WORTH HOLDING ON TO.

There's that old saying "A bird in the hand is worth two in the bush."
NOT TRUE WITH OPTIONS.. "An option in hand is worthless until you sell." Notice I said "worthless." It can happen and does every day.

So the opportunity to find a better call or put is Always there, you have to preserve capital... period.

Jim

Esteban, I know that options must be weighed within the time/risk envelope you perceive and that varies a great deal depending on the condition of the stock and market. But the above precedes this fact in all cases.
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