Stock Attack -- A Complete Analysis Message Board

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Strategies & Market Trends : Stock Attack -- A Complete Analysis

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To: dennis michael patterson who wrote (13499)	7/30/1998 11:39:00 PM
From: Robert Graham	Read Replies (2) of 42787

Yes, I know. Having been through a market like this before, it is truely amazing what the public will step up to purchase. I think PUTs is the play on YHOO, but timing is important here. Right now the price is encountering a resistance range from about 182 to 188. This is its first opportunity for the stock to fail. Then another significant resistance is at about 207. If the price manages to move past 207, it will continue for a distance. Given the above 200 value the upper resistance is at and the double top there, there is a small chance that the stock will make it above 207. But remember that timing is important here. We are talking about a price difference of 25 points here from where it is at to its upper resistance. I do not think you want to be on the receiving end of that move and then be forced to cover when expiration rolls around at possibly a 80% loss. Always play at the pivot point for a stock. AUG 180 out-of-the-money PUTs are about 11 points. If YHOO went up to 207, your PUTs would be worth lets say 2 points. I am guessing here, but you get the idea. So this would be a loss of 80% of your position even though in the end you are likely to be correct about the stock going down. "When?" is the important question here. I would be able to provide more accurate information on the option value estimates of mine if I had option pricing software available for me to use. Options are a completely different game than stock. They trade differently than the underlying stock, due to their leverage you can win big or lose all of your position, and you have time against you. By the way, why not choose a stock like AMZN that have more affordable PUTs? Bob Graham

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