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Strategies & Market Trends : Option Spreads, Credit my Debit -- Ignore unavailable to you. Want to Upgrade?

To: KFE who wrote (1181)	1/20/2000 8:20:00 PM
From: jjs_ynot	Read Replies (1) \| Respond to of 2317

McMillan Newsletter e-mail for anyone who is interested: Subject: Larry McMillan's Option Strategist Updater 2.5 Add Addresses From Lawrence G. McMillan's web site www.optionstrategist.com home for serious options traders and students. ========================================= In this issue: ========================================= 1. New: MAC Speaks - Audio Streaming from Larry McMillan 2. Stock Options and Futures Trading 3. Up to the Minute Market Commentary From Larry McMillan 4. McMillan's Strategy Advice 5. Seminar Coming Soon 6. Q&A with MAC 7. Free Trials ========================================= 1. New: MAC Speaks - Audio Streaming with Larry McMillan ========================================= Ever wanted to get verbal advice from the Options guru himself? Now is your chance. Simply click on the link below to hear Mr. McMillan's answers to some common and complex questions about the art and science of Options Trading. Best of all - it's free. optionstrategist.com ========================================= 2. Traded Ahead? NOT When You Have Direct Access! ========================================= optionstrategist.com Here are Four Reasons to use Interactive Brokers LLC when trading stocks options or futures. 1. Direct split-second Electronic Access to the world's primary exchanges. 2. Best price execution for multi-listed products. Connections to all primary ECN's and all US Equity Option exchanges. 3. Professional "All-In" Commission Rates. $.01/share for US stocks; $1.95 for equity options; $4.95 for futures. 4. The same direct access platform used by the world's leading market-maker. For more reasons to use Interactive Brokers visit optionstrategist.com. A Member of The Timber Hill Group ===================================================== 3. Up To The Minute Market Commentary From Lawrence McMillan ===================================================== One might think that with the NASDAQ market being as wild as it is that there would be a strong sentiment reading in the option market. That is somewhat true as there has been a LOT of call buying over the past couple of months. As a result of that overly bullish sentiment the equity-only put-call ratio remains on a sell signal. It is essentially going sideways but it has refused to head back down again -- which is what it would need to do to re-generate a buy signal. So for now this broad market indicator is still bearish. This indicator probably best represents the $SPX index. Meanwhile small caps continue to do fairly well (they were up again on Tuesday while big caps were down) and NASDAQ marches to its own beat. Thus in reality we are dealing with three markets which don't seem to be all that related on a day-to-day basis. In summary though with the equity-only put-call ratio on a sell signal we're still inclined to hold $OEX or $SPX bear spreads. ========================================= 4. Options Trading Strategy ========================================= With the great deal of volatility that individual stocks can display we continue to favor straddle buying as the best "neutral" strategy. The recent optimism (as well as the recent volatility) have forced call prices higher in general. That is implied volatility is pretty much at the highest levels for individual stock options. However there ARE individually cheap options -- such as the straddle purchase we recommended last week in Aztar (AZR). We continue to monitor prices for "cheap" straddles to buy and these are reported weekly to subscribers of The Option Strategist. optionstrategist.com Don't forget to check out our free implied and historic volatilities by visiting the Option History Data page www.optionstrategist.com/data Also we have three useful calculators free on the site at: optionstrategist.com ========================================= 5. Seminar Coming Soon ========================================= Intensive 3-Day Option Strategy Seminar including real-time trading is scheduled for May 6-8 in Atlanta. Our new format seminars is conducted by Mr. McMillan and designed for the serious investor or trader interested in a better understanding of option trading methods and strategies. Emphasis is placed on practical applications. Call us at 1-800-724-1817 to reserve your spot of learn more about the seminar at optionstrategist.com ========================================= 6. Q&A with MAC ========================================= The following Q&A is an example questions answered by Mr. McMillan on our site. Question: What happens to the outstanding option contracts if the company is acquired thus delisted prior to the maturity of the options. Am I forced to exrecise them before delisting so that I can realize the premium? M.S. 1/3/00 Answer: If the company is truly merged into another company the options will still exist but they will be changed to reflect the merger. For example suppose you own a call on ABC. Later XYZ buys ABC with the terms that ABC shareholders get 0.65 shares of XYZ for each share they own. Then after the merger becomes effectivethe "old" ABC options will become options on 65 shares of XYZ. If it's a cash tender offer however the options will still exist but they will most likely be converted in rights to receive cash. That is if XYZ makes a $19 cash bid for all shares of ABC then after the tender offer is completed all remaining shares of ABC are converted into rights to receive $19 of cash. If y ou don't exercise your call prior to the tender offer then it will automatically be exercised at expiration (as usual) and you will get $1900 cash for each option less the strike price. In neither case do the options "cease to exist". They still exist until expiration. However in the latter case you should exercise them or sell them prior to the expiration of the tender offer and put your money to work somewhere else. spidertel.net ========================================= 7. Free Trials ========================================= Don't forget to take advantage of the many free offers on the web site including free trials of The Options Strategist newsletter and the Daily Volume Alert service. www.optionstrategist.com/free_stuff =========================================