Hi Again Malcolm:
In response to:
"Unlike Scott, I don't think everyone needs an experienced broker to help you trade options successfully but you do need to gain extensive knowledge before taking the plunge.( it also helps if you can constantly watch the price of the underlying stock)."
I guess I am just passing on "lessons learned" when recommending going with a good options broker rather than doing it alone. Personally, I have flopped on my own picks but have done real well with the stuff my broker gives me from Dean Witter's option's dep't and their chief technical analyst.
As you know, the pick is important, but not as important as knowing when to sell. So I fully agree that you need someone who has real time quotes to know when to sell (and also buy). I have had some options on stocks which have -3 and +3 swings in the same day (Mobil, Intel, Sun, Texaco, etc), so the real time quotes are important to sell on the hikes (because they are sometimes for only a few minutes) and buy on the dips.
On the volatility of CAWS' stock and it imapct on the option price, you are right, it makes it not a great candidate for options. However, because the price has been stagnant recently, there is little premium and thus the option price is real cheap. If they do get the BANX contract done soon and do start selling video services soon we should see a quick spike in the price (IMHO, the new BANX contract, assuming the terms are favorable, should be worth a point or 2 alone) and all of a sudden you have a stock with some price volatility (a 2 point increase is about a 45% jump) which should immediately impact (positively) the premium value. Then you're holding options with higher premiums that you bought cheap. Anyhow, that's my wierdo logic on it.
But, as we both agree, technically CAWS is not a great option idea. I am doing it on the story alone, hoping that we will see a quick hike when the contract is done (thus increasing the premium)-- this is why it is not an option play my broker or tech analysts would like.
Take care. |
