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

To: Steve 667 who wrote (6699)	4/19/2000 3:25:00 PM
From: Steve 667	Read Replies (1) \| Respond to of 8096

one other thing. This stock also has a habit of moving either direction in the last 30 minutes of trading. Have not been able to predict the direction. If you figure it out, let me know. But it does it rather often. Steve

To: Steve 667 who wrote (6699)	4/19/2000 3:38:00 PM
From: Poet	Read Replies (1) \| Respond to of 8096

I see you're experienced in options trading and have developed your own strategy, which is eminently reasonable. I guess I'm so darned skittish now that I'm only looking to position trade or go with LEAPS (or buy the common). I'll keep an eye on it this last 1/2 hr. It may well sell off in anticipation of the earnings #.

To: Steve 667 who wrote (6699)	4/19/2000 4:24:00 PM
From: RocketMan	Read Replies (1) \| Respond to of 8096

I like to go in the money about 10 or 15 points, because if it goes against you say 10 points, your option only goes down about 5. So I like the July 85 or 90. Steve, this is a very important point for options trading, how will your option do if the price goes against you -- particularly in this market. From working through some Black-Scholes examples, however, I am a bit confused by your statement. I'm not sure if you're saying that you like to go ITM, or you like to go out in time to reduce delta. The more you go ITM, the higher the delta, and you would expect to lose more of $1 for every $1 that the stock turned against you. If you want to reduce that, would you not want to go OTM? For QCOM, for example, which is typical of high volatility G&Ks, using Black-Scholes for one month out I get a delta of around 0.7 for 10 points ITM, so if it goes against you by 10 points your option would drop 7, and this is relatively unaffected by time value (for some strange reason). For one year out, for example, delta goes from 0.68 to 0.74. For 10 points OTM, however, I get a delta of 0.44. Maybe I am missing something, or am confused. Or maybe SNDK trades differently.