Hi Agine Ryan: Heres a copy of my take and position I sent to Mike:
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Hi MIKE: Put/Calls AOL...I believe I'm locked into profit,
Mike I went into Feb 40 puts on the 17th, yesterday I had over doubled
my money..I was tempted to sell but in reading up on hedging I decided to give it a real try instead of selling, I was at Waterhouse new office out on Post Oak, as I set it up, and even the broker had a hard time comprehending my craziness, but I had given it some thought over the weekend and had made up my mind as to how I would do it to keep from selling my puts.
BTW I WENT WITH WATERHOUSE, set up electronic trading, $12 A TRADE
up to 5000 shares, and you can do your own right over the web.
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I went in AOL on the 17th 40 puts at $3..yesterday they hit 7..when I went in feb32.5 CaLLS were 10.25, ( I didn't buy them at that time )
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Yesterday they were 3.25.. and instead of selling my puts I bought,
the in the money calls ( "do you dig it" )..this is the first time
I'v have puts and calls on the same stock and I'm really happy with
my self...I'm hedged between 40 and 32.5, with my original investment
secured, and now a feb profit is assured..I also did a calculation
and bought more puts out in april in a home run position, of
april 20 with the 60% of the profit ( that I will collect when I cash in my feb positions )..its maybe complicated the way I'm explaining it
but its clear to me, my ( 32.5 calls..vs my 40 puts) will now see-saw
as long as she stays in that range..the primary reasons for this
position, is I still hold the puts, and if she takes a big hit,
and goes down they will gain value much faster than the calls lose,
if she goes up, my calls gain what my puts lose, unless she was to
pass 40..at that point my calls would outrun the loss in the puts,
I wont increase any profits between those 2 points, but what I was
ahead will stay there minus the commission..and that gives me the
right to be in on the chance of a really big move, with no risk
other than what I already took..( and won on ) "it's locked in"
a gamblers sure thing...I'm in for a piece of the pie, either way
and a bigger piece if she goes out side the see-saw range.
But I was straining my retarded brain on it for several days, when she does move down again I may just do the same thing for april..haven't figured that out yet..as those are way out of the money, worst case is I lose them, but at this time they only represent 60% of my locked in gain. ( agine the lock is to give me the In on a big move ) no matter
which way it goes..in that respect it's like a home run style.
I believe I'm 40% ahead at any rate and can take her to ex-date and
stare them bulls right in the eye..My timing could not have been
better..some luck I'm sure; but I was dong a lot of homework on this
one, and the more we work the luckier we get.
I still want her to dump her load, and I'm still betting she will,
I hang onto my april puts at least until I close out the feb..position which will be on ex-date..in spite of having
133 % profit in 10 days I did resist the urge to sell, but don't think I could have had I not figured out the hedge, now if I see her really jump up I may dump the puts..and hold the calls for a day or so..but what I saw today was far from a turn around..more like a fake out.
She's still 1-1/2 below where she was on open ; the day before, so
today the 1 point up don't offset the previous day with 2-1/2
down, and it's not really a turn around signal either as she could not
hold her early gains today..it's a maybe a sign but I would not count on it, as she wound up closeing closer to her low than to her high,
for the day, that is sure not a sign she is going to go back up, we should know more tomorrow..if she don't get up at least another 1-1/2 points , she will start sliding down again, which because of my april position..I want her to do that really big time..
I'l ride this dog to chapter 11, the longer
it takes her to get there the more I'll milk her, got the feel for
this one..like you have for chips..I ran as sysop for a BBS, for
a short time , and have some friends who opened up their own IPS, and man they are doing it like I use to build boxes, and "AOL can't make it at 19.95.
I KNOW THAT FOR A FACT, THE PROFIT MARGIN IS TOO SMALL AT THAT RATE
FOR UNLIMITED SERVICE, only the little guy can cut it that thin,
except AT&T or Sprint or MCI "might" as "they can run it at cost and
use it to drag you into using them for long distance," AOL does not
have that edge..and if the backdoor ISP, can just ekk out a living
at that low rate, what will AOL do..then you have the PC_CLUBS..
Hal in Houston, join them..small yearly fee..then discount ISP
service..plus space for your own web page..we may be fixing to start
one here in Lake Jackson..PC-Clubs have the advantage of being TAX
free..and volunteer labor..a server just don't cost that much,
put a 100 people together get a donation from the local what ever,
and bingo..some city halls are helping out the clubs, just to get
a town web sight, Florida seems to be leading the way with,
free internet access..there is a whole grope of people dedicated,
to making the internet accessible to every one with a pc and modem,
and they are going to win in the long run because they are so
determined, you have thousands of old BBS sysops that ran and furnished FIDO net on the BBS system for years, and 95% of then did it for free and only asked for a donation to offset their LD charges, and they will do it here to..companies like AOL are history..the promoters
better figure it out, till she goes belly up I will keep some sort
of short position open in her, hedging, wedging or what ever,
she is going down the tubes that much is for sure. The more times
she bounces up, the better I can wedge my self in..going to ride
her into the dirt were she belongs. :-)
JIM
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