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Technology Stocks : Dell Technologies Inc.

DELL 126.42

+2.8%

Dec 19 9:30 AM EST

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To: Rene Madsen who wrote (33803)	3/11/1998 12:06:00 PM
From: angel	Read Replies (1) of 176387

>>Just having a look at options.... seems to be even more gambling that shares eh Options add a new dimension (expiration time) to investing but require even more research. The potential gain is significantly higher and the loss is limited to 100% (excluding naked options). Note that shorting a stock has an infinite potential loss! Some people use a strategy of allocating 10% of their investment assets to options and 90% in a secure investment such as CDs. This way their loss is limited to 10%. I use options (puts) for protection whenever the market is about to experience a significant event such as an earnings release. For example when DELL released earnings last Feb. I had March 120 calls which I payed $3 1/2 for. I bought Feb 105s at $1 to offset possible bad news. The stock went up to 135 before I rolled up so I made 17-3.5-1=12.5 per contract on a 4.5 investment or 277% in a period of 4 weeks. If DELL had disappointed then the put would had offset the call (somewhat) and I expected to limit my loss to about 50%. The bottom line is that options can be used to reduce risk as well as to increase investment leverage. Rgds, Angel.

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