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

To: Terry Maloney who wrote (71471)	12/4/1999 5:50:00 PM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

Terry, The 90/10 is different than most portfolios as cutting my losses is not in any way a priority. My feeling is that I am buying a ticket and I am taking a ride. Of course, that devil-may-care attitude has to do with the 90/10 discipline and the fact that I buy out of the money options most of the time. But cutting losses simply does not seem logical in this portfolio and my experience has validated my gut feeling. One, example, that I've talked about on this thread before, was Presstek. That was one where I started buying puts when it was $50(prior to the 2 for one split) and bought them all the way up as it rose to $200. Many expired worthless along the way, but when the crash $25 came, it came so fast and furious that puts I had on at strike prices of $80, $90 and $100 all became very profitable. Had I cut my losses, selling puts I had bought at $3 or $4 for $1/2 or so, I would have missed on on some major winnings. I am not pointing out PRST as a good example. In fact, it was my bete noir in that I kept playing it because I knew I was right and the market wrong when I should have said, "this one has the evil eye on me and to hell with fundamentals. Play somewhere else with new money." But I have a tendency to stick my chin out like Mussolini and a big loser turned into a 600% winner on the total position. So, though I am not sure I should have kept on plugging, I am absolutely sure that I was right not to cut my losses. The $50 premium I could have saved meant nothing while the eventual profits meant a lot. I had a very similar situation with Citicorp last year, though it played out faster and my profits were much better. As far as a kiss your sister return goes, which I consider anything under a quadruple, expiration day is my key. I tend not to hold profitable positions into expiration week. I tend to punt and take my gains. If I still like the stock as a put, or a call, for that matter, I will re-establish further out in time and probably further up or down in strike price. So, I cut my profits near expiration, but let my losses run. Sounds crazy, but it works for me. <g>