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Technology Stocks : PairGain Technologies
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To: Spaw who wrote (25308)8/4/1998 2:31:00 AM
From: Rainmaker  Read Replies (1) of 36349
 
I appreciate your input, but the main reason for options trading is to allow one to "purchase" shares at a fraction of the stock price. This provides the maximum leverage from a limited portfolio (whatever amount that may be). Paying anything more than 10% of the traded value IMO is not a good deal, profit potential aside. Also, as the stock moves up, the call options at whatever price will also move up. Granted not the level it would be in the money, but up anyway.

When an investor decides to purchase options, one must also consider the stock rise potential prior to the expiration. My main reason for buying out of the money is based on my opinion that PAIR will rise to 20+ in the next three to six months. This belief is built on the information I've noted in earlier posts.

I agree with you that buying in the money is the "safer" route, but speculation is the name of the game on Wall Street. The level of risk an investor takes on relates to their aggressiveness and "pain" threshold. We can all reduce the downside potential through extensive research and information and advice provided on services such as SI. The remainder of how one invests rests on gut feeling, alignment of the moon with the stars, and sacrifices to their favorite God.

Happy Investing.
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