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Technology Stocks : Dell Technologies Inc.

DELL 122.55

+4.4%

3:59 PM EST

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To: Jeffrey E. Klein who wrote (95678)	2/7/1999 11:16:00 AM
From: BGR	Read Replies (1) of 176387

Jeffrey, Note: Not meant as investment advice. Option trading is inherently risky and I have often lost more money trading options than I earn in a year.<b/> There are no such things as low priced options. Adjusted for risk/reward, all options for a particular equity and for a particular strike are valued the same way. To give a very simplistic example (I am making the numbers up): Say DELL has a 70% probability to go to 110 by Feb expiration, 20% to 115 and 10% to 120, and 110, 115 and 120 are the only 3 strikes available. You will find that the 120s cost less than 115s but adjusted for the risk that you are taking (115's are twice as likely to be in the money than 120's), the values are justified. So it all depends on your risk preference. Do you want to make a relatively safer bet with lesser return or a riskier bet with the the chance of a windfall? The actual price of the option should be a non-issue. Decide on your risk/reward preference and hence on the particular strike; buy as many contracts as your risk capital would allow. I am holding Mar 110's which I plan to sell shortly after earnings. -Apratim.

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