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Strategies & Market Trends : Options -- Ignore unavailable to you. Want to Upgrade?

To: Teflon who wrote (660)	1/5/2000 8:47:00 AM
From: Jill	Read Replies (1) \| Respond to of 8096

Well that makes sense! I'm glad to see you over here and I hope you keep us posted on all your put activity. Rose helped me by PM with a little calculating last night. I was trying to figure out what buying the common of QCOM today vs buying 2001 strike price 200 OTM leap calls would be. They're down to about 38.50 as of close yesterday. If QCOM doubles by that time, the yqoat contract would then be worth its intrinsic value of $124 or about 322% of where it is now, and would hve now time value left. That would compare with 200% increase in the stock. But you have to conisder that the option only costs about $40 and the stock about $160 so you are getting 4 times as much for your money. So the same $ amount of those options is 4 x 322/300 or over 6 times the leverage of the common. If Q doesn't make it past 200 then you're in trouble. Thanx Rose for helping me figure this out. I have another question for anyone however: In rolling out options, if anyone is considering rolling DIM Jan calls out to 2001, I believe one has to consider what one would have paid for the common, so the leverage might not be as great (i.e. a Jan 100 means you picked up the stock for 100 not 160.) Right, Rose? That's if you're considering it in your mind as an exact trade, sell near term, buy far term. Wouldn't you, in calculating your leverage, have to factor in the profit you immediately made (160-100) if you had exercised, and compare that to what you'd get if you roll out successfully (i.e. get at least a double in the stock) Thanx...