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Technology Stocks : Apple Inc.

AAPL 272.16

+0.1%

3:59 PM EST

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To: David Semoreson who wrote (10152)	3/26/1998 9:27:00 AM
From: John G. Mueller	Read Replies (2) of 213177

"But I got killed buying Jan 20 options when the stock closed at only 19.75" David, Amazing how these hot option stocks tend to move towards a nice round whole number at expiration. That's been going on so long I quit trying to figure out why. But leverage is not the most important thing in options trading. Survival is. Sometime do the math on profitable option trades and most times you'll find you would have made almost as much buying longer term "inthemoney" options. Do the math on losing trades is even easier (smile). 2 X something is worth more than 10 x nothing. But there are other ways to use options. If you are long 200 shares apple and you think its going to 40 by July, you could leverage your position by selling 2 July 25 calls (5) buying 5 July 30 (2). You could put on a "butterfly" spread by selling up to 5 July 35 calls at some point if and when you wanted to hedge your position. Lots of cool, crazy and dumb things to do in options and I have done them all. It also quite easy not to make any money even in a roaring bull market by being too bullish. LOL John

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