America On-Line: will it survive ...? 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.

Technology Stocks : America On-Line: will it survive ...?

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: rhet0ric who wrote (9216)	4/1/1998 6:24:00 PM
From: yard_man	Read Replies (1) of 13594

I think you just have to divide up the money you are willing to bet on the decline so as to spread it over a reasonable period of time or you can buy leap puts. Nearer term puts give you more bang for the buck, of course. Suppose AOL is 6 months or a year from tanking -- you just don't know. You can buy some short term puts every three months until you hit or buy the leap puts. If it takes a full year for the drop, then you don't really care, one way or the other. You still wind up paying for a lot of time premium that you didn't know you didn't need (if you knew, you would have waited and bought near term puts later on). On the other hand, suppose it tanks 2 - 3 months out. If you bought leaps you still participate, but you've got a lot of time value that was useless to you and gone if the puts go deeply in the money. Psycholgically perhaps its harder to do the short term options, watching some expire worthless, if the collapse doesn't come soon enough. I'm no expert. I just wouldn't buy more than 10 points out of the money and never shorter than a couple of months out. Never bet more than you can really afford to lose and try again.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next