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

To: richardmacintyre who wrote (6766)	4/20/2000 6:09:00 PM
From: Poet	Respond to of 8096

Hi Richard, Welcome to the thread. I happen to be online so thought I'd give you a quick answer now. I'll respond in more detail to your specific questions tomorrow. First, I think you've made some great moves by doing your investing in Gorillas and Kings. You can learn an enormous amount by lurking - and participating- there. We're a modest offshoot, but most of us follow the thread and many of the principles in our options trading. The second thing you did right was not buying on margin, particularly at this point in time! And if you invested wisely, you'll do very well over the long run. I'm a believer in purchasing LEAPs on Gorillas and Kings, particularly at a time like this (see Rocketman's previous post). You're wise to be looking at the 2002's. And be aware that the 2003's will be out in July. Which stocks are you looking to buy LEAPs on? That would help us guide you through some scenarios. The last thing I'll leave you with is that you are able to write monthly covered calls against LEAPs, which, if done prudently, can provide regular income or be used to reduce the cost basis of your LEAPs. That's it for now. A hearty welcome to you, and I'll post you again in the morning, as I hope others will.

To: richardmacintyre who wrote (6766)	4/20/2000 6:51:00 PM
From: Bridge Player	Read Replies (1) \| Respond to of 8096

Hello Richard, << Sins: Invested too much too fast w/o sufficient DD; still don't know much about valuation or how to figure it out for tech stocks >> IMO you might want to consider the possibility, just the outside possibility mind you, that in the next couple of years rapid growth, quality, premium G&K tech stocks might actually return to valuation levels that used to prevail until just the last few years; namely, PE multiples of, say, 40-60 for companies with steady growth of 40%+. Look at the actual earnings for some of the leading stocks today; apply those growth rates to them, and see what price projections you arrive at for 2001. Now I know it is not fashionable to discuss such outmoded stuff as PEs in todays market. But fashions do change. All IMO. BP

To: richardmacintyre who wrote (6766)	4/21/2000 9:26:00 AM
From: Poet	Read Replies (1) \| Respond to of 8096

Hi Richard: I'm getting back to your specific questions on buying LEAPS on QCOM and INTEL. First, pull up the Dreyfus options chain in a separate window so you can go back and forth. The first column consists of a "C" or a "P", standing for call or put. Make sure you're looking at calls. The next column is the expiration date. All LEAPs have January expiry. The 2002 LEAPs, then, are "JAN02". The third column is the strike price (You were right!), also in blue. The forth column is the price the option last traded at, which, for LEAPs, is not necessarily important because LEAPs aren't traded with as much frquency as short term options. You'll see on the QCOM Leaps chain, for instance, that the "last" price is often significantly different than the "ask" price. The "ask" price is the price at which you could buy the LEAP option on Monday, barring any significant gap up of down in QCOM's price on Monday. The second-to-last column is "OI" or "open interest" and reflects the number of these contracts which have been purchased and and are not yet sold. I usually scan this column and look for a high OI, as this means it'll be more likely for me to find a buyer for my LEAP when I decide to sell it.The last column is the symbol of the option. The first three letters identify the inderlying stock. The fourth letter denotes the year of expiration. The last letter denotes the strike price. Here are three strategies for LEAPs purchases on QCOM (with QCOM currently approx. 110): Buy DIM Leap (deep in the money) CONSERVATIVE The Jan 2002 85-strike LEAP is about 25% in the money. The symbol is WIJAQ. The bid is $50 1/2 and the ask is $51 1/2. The value of this LEAP, because it is in the money, would move about .75 with every one-point move upward in QCOM's price. BUY ATM LEAP (at the money) MODERATE The January 2002 110-strike LEAP is at the money (the current price of the stock). The symbol is YQJAB. The bid is $41 1/4 and the ask is $42 1/4. The value of this LEAP, because it is at the money, will move up .50 with every one point move upward in QCOM's price. Buy OTM LEAP (out of the money) AGGRESSIVE The Jan 2002 135-strike LEAP is approximately 25% out of the money. It's symbol is XQOAG. The bid is $33 5/8 and the ask is $34 5/8. The value of this LEAP, because it is out of the money, will move up approximately .25 with every one point increase in QCOM's price. This description is rather simplified, but hopefully will give you some guidance as to the kind of LEAPs strategy you feel most comfortable with.