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

To: Jeffry K. Smith who wrote (4071)	3/2/2000 8:09:00 PM
From: Poet	Read Replies (1) \| Respond to of 8096

Hi Jeff, By "sweet spots" I mean being able to look at an option chain and seeing where your best bets are. For example, say I wanted to sell JDSU March puts today, because JDSU has strong momentum going into its split. Now, first, if you trade options regularly, you begin to understand that about halfway through each option cycle (two weeks into each expiry), the time decay on calls and puts begins to accelerate. They lose their value more quickly. This is a good time to sell puts on issues that are strong and that may have pulled back temporarily. You look at the stock's chart for support. You think about at what price you wouldn't mind owning that stock if it's "put" to you in case of a sudden market correction. You look at the option chain, with the support level in mind, and see at what strike prices the most puts have recently been traded. Ideally, you want to trade any option on a strike price where there's a lot of "open interest", or where others have already bought or sold.