vlh,
Thanks.
Another LEAPS that I am looking at is LU Jan98 60 calls and AOL 40 puts.
An idea... buy a in-the-money LEAPS on a stock, but play like a rolling stock.
Scenario: if COMS is trading between 33-38 range for the rest of the year. (It was doing that the first half of last year from 38-50 to form a triple bottom). Using LEAPS as a way of buying/selling stock in a trading range actually have a bigger percentage gain. And since it is a long term option, it is much safer and provide a greater margin of error (you don't need to be exact with the Time factor).
Result: if you buy COMS 32 1/2 calls LEAPS at 9 yesterday, and if COMS go up to 38+, the LEAPS should worth ~12, a 33% gain. Also instead of using $3600 to buy 100 shares, or 200 shares on 50% margin, you can buy 400 share LEAPS without interest.
What's your take? I am going to try this idea with the networking stocks since stocks tend to trade in a trading range when they are forming a bottom.
short term trend, assuming COMS earning will NOT create a major selloff.
CSCC (26->32)
CSCO (49->54), I still think it will go down to mid 40s.
COMS (33-38)
Regards,
Alex |
