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Technology Stocks : 3Com Corporation (COMS) -- Ignore unavailable to you. Want to Upgrade?

To: rabbit who wrote (39409)2/16/2000 5:57:00 PM
From: Mang Cheng  Respond to of 45548
 
<First of all, I am surprised that you can buy options on margin.>

No, I didn't use margin to buy calls in my scenerio.

<Last but not the least, buying is for leverage, controlling large numbers of shares with small sum of capital. That being the goal, you should buy March or April options.>

I don't like short term options. It's text book example that for call option buyers you should buy calls with the longest possible term. For option sellers, you should write calls with the shortest term.

Mang



To: rabbit who wrote (39409)2/16/2000 6:11:00 PM
From: JB  Respond to of 45548
 
If coms = $75....70% maintenance margin call hits at (1- 70/200) x $75 = $48.75.....requiring a drop of -35.0%.

For trading accounts (with some firms))....75% maintenance call would hit at (1-75/200)x $75 = $46.88.....requiring a drop of -37.5%

.....& if stock drops below the 35% (or 37.5%)...you got three trading days to escape!!....before maintenance call hits.

JB



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