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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: TRINDY who wrote (70609)	11/16/1999 12:11:00 PM
From: Knighty Tin	Read Replies (2) \| Respond to of 132070

Trindy, I would agree about the scenario you pointed out. That is why I won't put on an option that doesn't have potential for at least a quadruple. And, in general, that means higher priced stocks. I usually don't start put positions on stocks priced under $30 and stop rolling down on old ones, ala Compaq, when they reach $20. The reward potential is just not as great. I am playing Dell, but I think the risk in a nuclear winter scenario is more like $10-15 a share as both eps and pe ratio disappear. However, if you think the risk is only $10, I think this put is a bad deal for you. I would caution you against one thing. These are fungible instruments and if Dell loses $10 a share not by expiration day, but say, by early January, your put option will have pure premium in addition to intrinsic value. So, it is ok to look at intrinsic value at expiration, but you also have to play for an earlier resolution that gives you an even greater profit. In general, I would say you shouldn't play options until you have much more confidence that a move of more than 25%, which is the 10 points on Dell that you mentioned, is likely to take place. And be sure to guaranty that if you don't use my 90/10 system, you use some sort of money mgt. system that allows you more than one shot at the target. I think we are already in nuclear winter for the companies and that just hasn't been translated to the stocks yet. Business really stinks out there in the real world. However, you have to expect lots of Xmas lies for awhile as the cos. try to whistle past the cemetary. This happens every year, and, so far, investors have fallen for the tall tales and not even gotten mad at the cos. after their lies have been proven to be lies.