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Technology Stocks : Cymer (CYMI) -- Ignore unavailable to you. Want to Upgrade?

To: Jerome who wrote (23593)	11/16/1999 10:42:00 PM
From: Jerome	Read Replies (1) \| Respond to of 25960

Options are the LOTTO Tickets of the investing class Every now and then, one develops a certitude that a given stock is undervalued at current levels and that it will trend upward to proper valuations. Cymer fits this description based on the valuation given by thread posters. But if there is insufficient cash in the account to buy the desired number of shares, or if the selling of something else is not appealing at the moment, then options would be the best choice. Following is an example of how this would work. The CYMI May 30's closed at 18 5/8 x 19 3/8. This option is 16 points in the money and 3 points extrinsic value.The three points bring the cost to 1/2 point per month.(3 points divided by 6 months ='s 1/2) The second choice would be to buy the May 50's at 7 1/8 x 8. But here CYMI would have to rise past 58 before any profit would result. The first example shows why the option position could work out better than the stock. The purchase of 200 shares of Cymer at today's close would cost $9,300.00. and if Cymer reached 60 by the third Friday of May the gain would be $2800.00. Just about 30%. But instead consider the purchase of 4 May 30's contacts at 19 3/8 the asking price. The total cost would be $7,750.00. If Cymer reached 60 by the options expiration date in May the value of the four contracts would be $12,000.00 or a gain of $4250.00. This represents a gain of 54%. The advantage of the Cymer May 30's is that less total Capital is at risk. A second advantage is that Cymer reported strong bookings going forward and this position has a high probability of working out. But an old timer I once downed a few beers with said, "don't sell your horse to buy a saddle" I think he was on to something. Usual caveats always apply with options. Good Luck, Jerome