Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: otter who wrote (41612)	4/5/1999 8:33:00 PM
From: Mark Adams	Read Replies (1) of 95453

I like using options from time to time. I'm careful not to get carried away with the number of contracts, limiting myself to what I'd purchase if I went with the stock. One aspect which isn't often mentioned, is that if you buy an at or slightly out of the money option 3-6 months out, and the stock moves against you, your loss is limited to the premium (usually a few dollars). This tends to enforce some discipline on value investors who don't like to cut their losers short. When I own a stock which has gone against me, I'll use options to double down on occasion. Depends on the stock price and the option price; I usually go long stock rather than options for any stock selling under $12, and sometimes resort to options instead of that dreaded margin when I'm feeling fully invested. They are a tool, one that you need to work with to build competence.

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