I find that if I bid carefully liquidity doesn't matter. I mean, you can follow stock quotes and follow option quotes with a delay from the CBOE (or, see the message to me today with an excellent real-time option quote service). If you can catch an option at an attrative price (I make my final decision while on the phone with a broker), you can either take the offer or put in a limit GTC bid between bid and asked, and usually get a quick execution.
On the whole I prefer LEAPS for 2001 because there is no hurry about expiration--though recently I bought a pile of Schwab 40s for 2000, and even an EBAY for late next fall.
I consider this nothing but gambling, but am willing to gamble when those on the other side display such obvious derangement. I currently hold LEAPS with strikes near or about 25% below current quote on AMZN (76.6), YHOO (90), SCH (40), INTC (120), AOL (65), DELL (30), PVN (80), XLK (38), and MU(50) and one option on EBAY (Oct 70).
Some of these were originally much below quote but are now in the money or close to it.
I guess that gives a pretty good picture, though I have not said how many of each I hold.
I guess I am revealing this because these must have done quite well today. My whole put portfolio is probably up over 10% on the day--not bad when you consider that's about average for a year in the very long run in stocks.
Of course, it could go right back down tomorrow. Gambling! Hope to get out with a good increase in capital and put it in the bank. |
