Hawk RE: LEAPing into freefall
Sorry to hear about your experience. :( You have lived my biggest concern about LEAP based investing (volatility 'the dark side';-) The only defensive strategy that I could think of is to eventually have a rolling interest in each of my core companies (currently CSCO, INTC, MSFT) meaning that I would have 99, 00, 01 LEAPS for each. Now I would be patiently looking for a good exit on the 99's and a good entry into the 01s(in summer) for precisely the reason you described. This is only my personal theory, as I have not read any books on options.
My CSCO, and LU options are near enough to the money that a 20% correction would hurt for a longggg while. My hope was that jan00 provides enough time to recover.
CPQ Jan 35's VKPAG's when the stock was 68
Sorry, I don't understand the numbers. By this to you mean you bought CPQ 70s (presplit)?
Are you still trading LEAPS? How has this experience changed your trades? I think you still lose big no matter how deep in the money you are. I'm still not sure if one is really better than the other, or if it's just the total exposure that counts. I guess total exposure has the biggest impact.
My big loss last year was with a subprime lender (are any eyes rolling, be honest :-)CTYS now CTYSC I learned such valuable concepts such as floorless convertible preferred shares and gain on sale accounting and their affects on earnings and dilution. I was almost wiped out. Also learned the importance of diversification or at least why not to be overlay concentrated in one or two companies. These and many more things now have a very personal meaning vs. terms in a book or hear some investment counseller saying them . I am chuckling as I write this, thinking how could I have done this. Learning by doing does have its `dark side'. I don't mind sharing this because I hope others can learn and not have my same experience. I appreciate you sharing your experience.
I would be interested in hearing how `the dudes' diversify their portfolios. My myopic tech. focus may haunt me in a meltdown even with international exposure.
Thanks to all,
Chris |
