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

To: taxman who wrote (5718)	3/29/2000 4:14:00 AM
From: PAL	Read Replies (1) \| Respond to of 8096

taxman: do not dismiss your buying jdsu call as a wrong move. as i posted earlier, there are many ways to score a run. the jdsu call could turns out to be a home run since jdsu is one of the best companies that currently are the favorite of financial institutions. let us compare the two approaches: a. selling CC on jdsu april 135: the stock more likely will be called. there is a limit of the profit derived, i.e. when jdsu is called at 135. i call this a hit single. the people who sells CC in this respect is satisfied with 15% - 20% return for 4 weeks. b. buying jdsu april 135 calls: there is no telling how far jdsu will go, the option you buy could be a four bagger or even more. this is a home run. The above illustrates an interesting phenomena: parties on both sides of the trades can make money, just the magnitudes are different. So, it depends upon one's risk/reward and the comfort level plus investment objective. So far I have only presented one side of the equation: the reward of each strategy. How about the risk factor of strategy a as compared to strategy? If anyone is interested and time allows I will make an effort to post the risk associated with each strategy. best regards paul