Tom Dorsey Q&A Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Tom Dorsey Q&A

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Al Serrao who wrote (32)	3/2/1998 8:48:00 PM
From: Ms. X	Read Replies (1) of 102

Options are different. There are more variables to consider. All too often investors or traders take option positions and trade them for 50% gain ie. $3 to $4 1-2 0nly to watch the next four expire worthless. Because you invest only a fraction of the price of the stock you have what I call staying power. If you were long the stock and were stopped out you would be finished with the trade and not likely to go back in. I consider the premium of the option as the amount of money you would risk in the stock. You then have the ability to ride the trade all the way to the end. It is the same reason that the Dogs of the Dow is successful. The investor is taken out of the equation for a year or more. The investor himself is generally the biggest deterrent to profits. All it takes is one option to go from $6 to $60, and they do, and you have have made a tremendous hit that makes up for many that expire. Just go back and look at all your option trades and calculate where you would be if you held to expiration. Naturally buying calls in a defensive market and in a sector that is high will yield a total evaporation of premium. T

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next