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Technology Stocks : Dell Technologies Inc.
DELL 154.64-3.4%Nov 4 3:59 PM EST
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To: BGR who wrote (89761)1/19/1999 10:20:00 AM
From: BGR  Read Replies (1) of 176387
 
Thread,

It was pointed out to me that on reading my posts some may get the impression that LEAPS are risk-free. Not!

My first LEAP buy was in 1997 for INTC 1999 120's for an average price of 800-900/contract when the underlying equity was in the low 90's. INTC afterwards fell to the 60's and my LEAPS lost a total value of 80% approx. and fell to 100-150/contract. At this point I sold - which in hindsight was a mistake as those who bought at comparable prices and held to expiration would have recovered their investments as well as made a profit which would have been about the same as the underlying equity price appreciation (still not worth the risk, perhaps). But in any case that experience taught me the risk associated with options, short-term and long-term.

So, please do not forget that LEAPS are options after all and have similar wide price swings, both up and down. As CTC put it very well, he who lives by margin gets crushed when the ball starts rolling in the other direction. The only thing that I like about LEAPS over a margined position attempting the same return is that in case of market panics margin call never forces one's hand if one is still optimistic about the company's prospects. But everyone should do their own research before investing in any margined positions and not interpret my posts as investment advice.

-Apratim.
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