LEAPS my personal take
How deep in the money is a question I have every time I'm looking to buy. The major factor that I attempt to estimate (really guess-timate ;-) is how strong a movement I expect the stock to have.
Here are my personal example for the Year.
2/10/98 INTC trading at 86ish. Bought Jan00 80s (LNLAP) down 30%. I estimated that INTC would be trading between 110-125. Exit after 6/99
Bumps in the middle.
2/20/98 MSFT (presplit) 155. Bought Jan99 140 (now 2x of VMFAN). +65% I bought the day before the split hoping to catch the wave. Of the split and Win98. Good wave.so far ;-) My guess was MSFT at 100-110, maybe 120 by Jan.
3/12/98 CSCO 63ish, Bought Jan00 65 .+20% My guess is that CSCO would have a strong move so I went for more leverage. My guess is CSCO 95-110 range.
3/31/98 LU (presplit) 127ish Bought Jan00 130 (now 2x of LUNAM) +20%, My guess was the LU momentum after the split would buy a margin of safety. No idea of a price, but feel it will turn out fine. May be some dips before end of year. Strong player in strong sector. JMO
4/3/98 CPQ 26, Bought Jan00 20, +/- 10%. I went deep in the money because of uncertainty of how much of a move would be made. The DEC merger is not 100%, but should happen on time. The big factor is how the companies merge and are generating positive earnings. Uncertainty was translated to deep in the money. I feel confident that it will be trading above 30. In this case, I wanted less leverage and more security.
4/3/98 SEG 26 Bought Jan00 20, +/- 10%. Again deep in the money because of uncertainty.
4/8/98 LU 68, Bought Jan00 80, +/- 10%. After more reflection felt LU would see 110+ by next summer. (only a guess) At least I hope it does.
These are the LEAPS trades so far this year. One thing is clear to me. I don't have a strong feel of an exit strategy for any of these. In general I plan to hold until next summer. The MSFT 99 I may exit at any time. In the near term, if we see 105+ in the next three months I may consider taking profits. It will depend on Win98/DOJ issues.
I am new to LEAPS, so I don't have a feel for the best exit strategies. I am planning for 2001 LEAPS in (June, July, Aug) timeframe. I didn't know when 2001 LEAPS were available so I called CBOE and they were very helpful.
Any thoughts or comments????
Chris
PS I have been REALLY tempted to buy ADPT Jan00 20s today any opinions???? TA or FA |
