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Strategies & Market Trends : Waiting for the big Kahuna
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To: Stitch who wrote (15981)4/9/1998 8:56:00 PM
From: Barbara Barry  Read Replies (1) of 94695
 
Stitch,
I'll try.Firstly,even if you are new to options or not it never hurts to paper trade and see how an option behaves given whatever the conditions are.That is what I decided to do with the oex 530 puts.I really do not know how they will do sooo close to expiry. The reason you don't want to hold is that everyday closer to expiry you lose your "time edge" or time premium.Try picking a May put and watch what it does in a week or two.You NEVER want an option to expire worthless and most people let that happen.Don't be stubborn...it's better to take a 50% loss even when you think you are right about the market.If this market goes up or even just trades fairly flat on Mon. you will be amazed how much lower those put premiums can go.I hope you and others get enough volatility by tues or wed to get out without much damage.IF you get a 300+drop you'll be ahead,otherwise you will see time eat your premiums.The leverage always looks good near expiry but you take on a lot more risk.In the money or near the money options will only move with the market without any extra little $$$/%%%% that you get when you have more time.It strikes me that THEY say you can't time the market and yet how often have we heard "timing is everything"??<vbg>
Best of luck,
Barbara
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