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

To: Duncan J Horn who wrote (3585)	2/25/2000 7:08:00 AM
From: edamo	Respond to of 8096

duncan..."expirations" i hold open leap contracts (just don't talk much about them as they are akin to watching paint dry....but can be low stress and quite lucrative) in addition to short term expirations.

To: Duncan J Horn who wrote (3585)	2/25/2000 8:09:00 AM
From: Jill	Respond to of 8096

Those are great questions. When you have a huge margin capacity and large portfolio, as DoK seems to, selling leaps allows peace of mind (avoid monitoring volatility daily--and he's a busy doc) and he avoids some of the tax liability (this was recently explained to me by Ed. If you sell 2002 for example, you don't close the position until 2002, so you don't pay tax on the premium you took in until then. But you are using the $.) You are right that generally repeatedly selling short term adds up to more in the end. In some cases you may be expecting news, and the implied volatility may make for richer premiums closer in. In the case of JDSU, we were expecting a presplit run, it had consolidated in the low 200s, premiums were good. So one could sell March puts in early mid Feb and expect them to deteriorate very quickly. I think there is some rhyme and reason, and some of it has to do with the person's individual portfolio and capacity and what other puts they may have sold, both short term and leap, etc.

To: Duncan J Horn who wrote (3585)	2/25/2000 8:16:00 AM
From: Poet	Read Replies (1) \| Respond to of 8096

Duncan, You're right about us having a ball. <G> I can understand why you see no pattern to my trading, as I'm trying to learn from the real masters here and so have been following them into some trades. I started as a daytrader and will still daytrade options from time to time if the conditions are right. Generally, I try to tailor an options trade to the specifics of the company (ie the pullback in QCOM yesterday, which to me showed surprising strength in the stock, leading me to establish a bullish position). I followed DoK into the SEBL Leap call put sale last week. I sold some SEBL 2002 80-strike puts at $19 1/2. Then I got antsy, to be honest. I kept saying to myself "Why am I tying up the equity in my account for two years in a trade that will only give me $19,500?" So I bought them back at $17 1/2, pocketed the $2000, and moved on to what I seem to do best at: short term plays. I guess my point is that it's important to find your own style (short v. long term, aggressive v. conservative) but to also keep your mind open to others' ideas. I was an a simple call buyer and did very well with this strategy last fall and early winter, but when the market changed, as did the trading pattern of my favorite stock (QCOM) I decided to try to learn other strategies. PAL, ed, and others here have been patient teachers in the put selling strategy and I've found that it works for me too.