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Technology Stocks : Ascend Communications (ASND)
ASND 210.50+0.5%Nov 21 9:30 AM EST
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To: ricky who wrote (36540)2/26/1998 6:56:00 PM
From: Sowbug  Read Replies (2) of 61433
 
Ricky, you didn't ask me, but I'd second Gary's advice.

We're in the home stretch for March options, meaning that the option price is going to be little more than its intrinsic value (i.e., amount by which the call option's strike price exceeds the current price of the underlying security). Thus, the delta (amount by which the option price moves for every dollar the stock moves) is very small, too.

What this means is you're getting exactly what you pay for with March options now, with relatively little opportunity for speculative profits.

Things could be worse for you. I own 50 March 45 calls. I was tempted back in the infancy of my option-trading life by their tiny little 3/16 price. Even if Tim's right and ASND hits $40 tomorrow, I bet you they'll go to a bid price of only 1/4. And next week if ASND goes to $42 they may very well stay at $0 1/8. The week after that $44 is USELESS. In other words, it would take a 25% move in Ascend in three weeks for me to make money. That's practically takeover-rumor movement, meaning that the only way I'll profit on these options is if we hit the equivalent of the lottery. Stupid odds.

I would not do the same thing again.

Gary,

I own 20 Mar 40 calls and am considering purchasing
an additional 30. I would appreciate your short term
view of where this stock is going. I also own shares
in the company. (300)

Rick
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