Roger's 1998 Short Picks Message Board

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Strategies & Market Trends : Roger's 1998 Short Picks

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To: Jacques Chitte who wrote (8783)	5/14/1998 5:45:00 PM
From: Don Westermeyer	Read Replies (1) of 18691

Alex, Using an option to reduce the risk of a large holding is perfectly appropriate - especially if your new to this game. The other way to reduce risk is to just own less of the stock. As far as ZITL goes, I wouldn't bother hedging unless some real positive news comes from the company. I doubt that will happen. Sometimes I'll sell deep out of the money options as a bet. For instance I might sell June $5 puts in ZITL for 1/4 thinking if the stock goes below $5 I'll probably cover anyway (at least partially). One nice thing selling a ZITL option is there is a lot of premium in the option due to its volatility. I suspect a lot of fools will buy/write ZITL at $7.50 because of the 12% premium in the call. Good luck, Don

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