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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Epinephrine who wrote (103874)	4/11/2000 3:53:00 PM
From: Road Walker	Read Replies (3) \| Respond to of 1571172

E, re: Options If AMD closes on 4/22 at $75 or below, your option will expire worthless. If AMD were to close at $80, your options would be worth $5 per share; $500 per contract. At least you know how much you can lose. Those that sold puts have an almost unlimited potential for loss. Good luck, John

To: Epinephrine who wrote (103874)	4/11/2000 4:05:00 PM
From: Gopher Broke	Read Replies (1) \| Respond to of 1571172

Epinephrine, whether my strategy was majorly flawed somehow Your question is not specifically about options trading it is about timing the market. In this case you thought that the stock would go up in the short term and so chose to increase your leverage by buying near the money options rather than short-term trading the stock. Timing is generally considered a bad idea - I think 80% of daytraders fail to make money? So, yes, as an investment decision you could regard it as flawed. Having said that, I have been doing a similar thing. My reasoning is that, while the expectation is that AMD will do well, I think AMD will do exceptionally well. Therefore the stock should go up, but only AFTER the announcement. Pre-announcement anticipation of good news was more than factored into the price by now, plus a little nervousness factored in to give us the volatility we are seeing today. So, while it would be reasonable to take a profit before the announcement, if AMD did rocket, you should have recognized that this was inherently a bet on there being a blowout announcement and therefore that you would hold until post announcement, come hell or high water. I hope that makes sense. In case you hadn't noticed this is the hell or high water bit :^)