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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: werefrog who wrote (36591)	1/15/2000 12:22:00 PM
From: taxman	Read Replies (1) \| Respond to of 74651

thanks. i have my own experience in day trading. there was a time when dell options were traded only on the philadelphia but were very active. the market makers were setting .375 spreads such as 2.25 bid, 2.625 asked. i would bid 2.25 myself for 10 contracts, thereby coming in ahead of the market maker. if filled, i would then try to sell, assuming the market was the same, for 2.625 for a 387 dollar, less 35 dollar commission, profit. the same was true until recently for microsoft options on the pacific exchange. on a good day i could do this a few times making between 1 and 2 thousand dollars. i would seldom lose because of my .375 edge and even if i got stuck with the options because of a sudden turn in the market, my maximum loss on ten contracts at 2.25 would be 2.25 thousand dollars. on the other hand, the market could turn in my favor after my purchase. now this game no longer pays as dell and microsoft spreads have narrowed to .125 or even .0625 on account of the competition between the exchanges. in any event i did this as a hobby or a game like playing tennis. however, my profits, as lucrative as they were, were insignificant compared to the profits from my long term holdings. as to your post, it seems to me that risking 50,000 dollars to make 85 dollars is a disaster waiting to happen. off the top of head i can think of three stocks that did drop from 50, or close to it, to zero, or close to it: fruit of the loom, breed technology and hvide marine. when the spread is bid 50 & ask 50 1/8, don't you have to wait your turn to get filled if you match the bid to buy or the ask to sell? with options a bid from the public at the same price as the market maker has preference. regards