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

To: RocketMan who wrote (7106)	5/1/2000 10:21:00 AM
From: edamo	Read Replies (2) \| Respond to of 8096

rm..."valid arguments for dim....safety not one of them" au contraire...intrinsic value means quite a bit...even gives you the ability to write covered calls against at a strike higher then your strike plus premium paid...this luxury is not available with otm, until they become atm or itm... you miss the whole point of options....too many believe it is okay to "gamble"....might as well go to a casino, at least they comp you with rooms,food and drinks.... ditm is used as a viable stock replacement...your statement that on a 50% pullback you only lose 50% with common....and you can hold on...do you infer that you lose more then 50% with a ditm? do you not have a cost basis fairly close to the common? let's address safety a ditm if purchased prudently allows you to exercise with a minimum premium to the current market...this is your safety..... it's obvious that your options strategy is not one of portfolio enhancement....good for you, but try to temper the comments so others would not equate "cheap" for "better"....the object is not to "gamble" or "be willing to lose" with options...although it appears that this is the posture taken by many inexperienced option "investors?" you as many have been successful with otm's in a tremendous bull run....don't believe it can always be this way....

To: RocketMan who wrote (7106)	5/1/2000 9:05:00 PM
From: SecularBull	Read Replies (2) \| Respond to of 8096

Rocket, I read the thread of discussion between you and edamo today. While I agree with you that DIM calls are expensive to buy, I think that if you buy them right, you're not likely to take the hit that you have suggested. Safety is possible in DIM if you are a prudent buyer. Also, it seems to me that your opinion and that of ed differ over philosophy in terms of gambling vs. investing. For me, call buying is not gambling, but rather stock substitution (as ed referred to it). In that sense, I am more inclined to buy the DIM call. Buying OTM calls certainly is much more gambling than buying DIM calls. As having the experience in being on the receiving end of edamo's critique, I can understand your feelings in this matter. Those feelings aside, however, I have to say that I think that ed's position in this particular matter is more clear, consistent and prudent. I understand what you are saying, but as an investor, I am not inclined to agree with you over ed (in this particular case). A penchant for gambling provides me with the vision to make timely (albeit sometimes very risky) decisions. However, gambling is not my modus operandi. Investing is. I appreciate your input on this and many other threads, and hope that you are not offended by my points. Regards, LoF