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Technology Stocks : CMGI What is the latest news on this stock?
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To: Jenne who wrote (8538)5/24/1999 1:47:00 PM
From: Mark Peterson CPA  Read Replies (2) of 19700
 
The trader can make a few dollars if they find the bottom and then ride the spike and sell..

You're right, of course. But there's more than one way to skin a cat (and I like cats). With CMGI at 230 on Fri, you could sell AT THE MONEY CALLS for $30. $30,000 on a 10 lot.

Now if you came to me and said, Mark, I'd like to borrow $230,000 and will pay you whatever a market rate of return is for that 230. Well, since I sell CMGI calls as an alternative to work-working, I might be willing to lend you that $230,000 for a year in exchange for $360,000 of interest. Of course, you would think that's an unreasonable rate of return. But it's 12 months of selling at the money calls.

And that should tell you something. The volatility in the options suggests that the underlying stock is expected to go UP and DOWN. And not just by a teeny bit. That should have been a tip-off for those who expected an unhindered run to $400 per share without emptying the contents of their stomachs along the way.

But it's still gonna happen. Just takes some time.

And that's OK by me.

Mark
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