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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Uncle Frank who wrote (5806)	9/1/1999 8:55:00 PM
From: edamo	Respond to of 54805

uncle frank....re: "do not influence the valuation" derivatives much as common stock do not influence the valuation of the underlying company. the market value of the stock has no bearing on the operational balance sheet of the company. options however have a major influence on the stock price.......why? at some point be they puts or calls they will be exercised and converted to common stock...they just don't disappear......proof is erratic price action on the third friday(expiration) and monday(settlement)of each and every month. option value is not dictated purely by the value of the underlying equity...it is determined without getting too technical by a formula that determines future value. the wild card in the formula is the assigned volatility, which is based on a range of the underlying....remember every option position must be offset by the investor or the options trader. it's settled sooner or later and can create a trading range for the underlying stock.... "timing gorillas not necessary"........perhaps in days gone by...but why get wet in a blinding rain storm when options plays give you shelter...read lindy bills post about further drop in qcom and his proposed action......if calls would have been sold at 190+...todays drop would have been offset by premiums...i don't own qcom...but took in today 14.75 points on a 00150 put.....covered a major part of the retrace...... all i can say is regardless of stock....options make the sea less choppy....just one man's opinion on how to not to get seasick in today's ocean of woe.... it's a media driven market frank, old rules are changing, fund managers can't make money on a portfolio that goes straight up...they got to churn...and today qcom report gave reason to take profits.......it's the new way of doing things...a bit sad...they don't care about your money...just the cap gains they can ring up every quarter......this is the dynamic...nothing wrong with countering it....thanks as always your logical input..ed a.