Options-Upcoming Stock Splits Message Board

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Strategies & Market Trends : Options-Upcoming Stock Splits

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To: Freda Kjolhede who wrote ()	10/11/1996 5:17:00 PM
From: Willsgarden	of 415

Hi Freda, surprised no one responded given the extreme turbulence surrounding companies that anounce splits. I've dabbled on options on stocks going to split and found that there are a few secrets and inconsistencies. First and formost should establish how much insider buying has gone on befor the announcement. I bought a week after the news to finally realize the stock was up about 15% the prior two weeks. Never do that again. Second, Huge dip when the selloff comes, will reverse about two weeks before the dividend date of record, and will sell off again as soon as it approaches that date, usually 1 week prior to div date. Remember that the option traders don't care about the dividends or owning these stocks. Third..is when playing options how to decide how far out to go. Varies with the stock, your objectives, and risk tollerance. a good hedge is to buy a short term play that just gets you thru the div date, and a longer play because most fundamentally good companies will split for good reasons and begin to climb after the split happens. Fourth..I only look for 2 for 1 and 3 for 1 splits. Fifth..be aware of the market climate and group industry technicals. I hope this thread will stimulate some interest. Options on stock splits is busy work but great cash flow and relatively easy research. Charting is essential. I'm not liquid now but look for appropriate splitting stocks when ever I am. Hope to keep a portion of my cash always in option plays on splitters, in the coming months. It has the ability to generate good cash flow especially if your living on your portfolio. Its real quick. Perfect for the impatient ones like me. Bill Monier

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