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Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: Ken W who wrote (18826)	2/12/2000 11:23:00 PM
From: lostmymoney	Read Replies (2) \| Respond to of 29382

Ken, We are trying to talk serious here about Jarrett and Rudd, getting pole positions and you come on here talking about calls, options etc.,. You are pretty intelligent! I have no idea what your talking about, but I love you man!!!! IFLO lets GO!!!! Mikie

To: Ken W who wrote (18826)	2/12/2000 11:27:00 PM
From: lostmymoney	Read Replies (1) \| Respond to of 29382

Time to take a position in ASTN....Market Watch Recommendation Stock is a Strong Buy. Comment Moving Average Convergence/Divergence (MACD) indicates a Bullish Trend. Chart pattern indicates a Weak Upward Trend. Relative Strength is Bullish. Up/Down volume pattern indicates that the stock is under Accumulation. The 50 day Moving Average is rising which is Bullish. The 200 day Moving Average is rising which is Bullish. Price is under Support of 10.33 which is Bearish.

To: Ken W who wrote (18826)	2/13/2000 12:16:00 PM
From: Sal D	Read Replies (1) \| Respond to of 29382

Ken, I'm not sure I can answer your question but I will try. This is only my understanding on how option?s work and at the very least it might help you or inspire some other discussion on option's and how they can be used as part of an investment strategy. I may state things that are basic and you may already understand them but I do this for someone who may read this and not know anything about option?s but is interested in them. You say you want to hedge your position, buying calls is not a hedge. An investor would have to be very bullish on a stock to buy calls on it. He may be looking for leverage or perhaps senses a rise in the stock price but does not want to commit all of the capital needed to purchase the stock outright. The call owner has the opportunity to profit from the rise in the stock with very little capital at stake compared to the amount necessary to buy the stock, either way the investor would be bullish on the stock and anticipating a rise in the stock price. Writing covered calls (buying stock and selling calls on a share for share basis) on the other hand are for investors who are willing to limit upside potential in exchange for some downside protection. (technically I?m not sure this is a hedge either) On the covered call the investor is paid (the premium, witch in turn lowers his breakeven point) to agree to sell his stock at the strike price in exchange the investor gives up any increase in the stock above the strike price. If the call expires worthless the call writer can sell another call further out for an additional premium(lowering his purchase price even lower). If the call is assigned the call buyer exercises his right to buy the stock at the strike price even though the stock price is higher. The call seller has taken in the premium but no longer owns the stock. A hedge is to limit investment loss by offsetting an existing position. You can use (protective) puts as a hedge. Someone who hold's a stock, but does not want to sell because he believes the stock may go up and would like to participate in the rise without risking all of his profit (if any). Owning just stock you begin to profit as soon as the price rises over your entry point, but you have no protection in the event the price goo's down. Owning a put along with the stock ensures limited risk. Although it increases the breakeven point by the cost of the put it still allows unlimited profit above the breakeven point. When investing in option's one must have a certain outlook on a particular stock and then can begin to explore the different strategies option's can provide. In my examples above a person who is fairly sure there will be a rise in the stock might want to buy the calls. A person who is not certain about the stock prices future and already owns the stock and is willing to limit his upside potential for some downside protection may want to write some covered calls. And yet another person who also is not certain about the stock prices future and already owns the stock may want to buy puts for downside protection but still have the ability of unlimited profit above his breakeven point. These are just a few examples of how one can use option's there are many other's witch offer other types of insurance and leverage. Sorry I couldn't answer your question Ken but like you said is it too close to Mar. expire to buy the 5's or write covered calls and collect what premium is available now and take my chances this is only something you can answer based on your outlook of the stock price but I hope this help's you in your decision. Looking forward to more option discussion. Now I have to go and hunt down those #3 guys. Joe

To: Ken W who wrote (18826)	2/14/2000 6:41:00 PM
From: Sergio H	Read Replies (4) \| Respond to of 29382

<...at 1/8 or 3/16 do you think it is too close to Mar. expire to buy the 5's or write covered calls and collect what premium is avialable > With the stock selling at 3 1/8 to 3 1/4, the percentage gained if the stock hits 5 by the expiration date (3rd Fri. in March is about 60%. The extra bucks from selling the covered calls are gravy on top of that gain. However, if the stock doesn't get to the strike price, you keep the gravy. Selling short term out of the money calls is a good way to go IMO, although the short term interest in HBI options wasn't there today. IFLO report looks great. Let's see if it's enough to get over 5. I know...first 4, then maybe 5. IFLO's chart has defied logic, similar to GTNR as you pointed out. I suppose the negative MA crossover is a big plus. GO IFLO!!!! LH reports tomorrow at 10:00 AM. Please take a look at the chart. Notice the little gap has been filled. I love this stuff :-) XICO is now in high gear and ready to race with COMS. Congratulations Arnie, Joanie and Ditch on COMS. Way to go!!! MXTR, a little help or opinion please on chart. Looking at a monthly chart, you'll see an island formed mid November-end of Dec. Island reversal, si o no? Sergio