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

To: RocketMan who wrote (7349)	5/4/2000 4:17:00 PM
From: Jeffry K. Smith	Read Replies (1) \| Respond to of 8096

Don't think I will re-enter this market fully until it establishes a definite direction and stabilizes, even if I lose the first 30-50% of its move. I'm glad to see that you, edamo and others feel this way. I have wondered if those more experienced than I felt as I do - and the more I read, the more the "stay out until things are stable" angle comes up, and it is the position I adopted on my own. Always good to see experienced hands reinforce things though! Regards, Jeff Smith

To: RocketMan who wrote (7349)	5/4/2000 6:53:00 PM
From: edamo	Respond to of 8096

rocketman...we could have finished the dialogue on dim's if the "queens of protocol" would have left the interaction to evolve.. first and foremost, you must be intimate and confident of the underlying. to me confidence is only with companies that have posted year after year gains in revenue and profits. to play with momentum issues or future stars, be they qcom, gmst,ntap, whatever incurs a great deal of risk due to lack of consistent fundamentals. buying a dim qcom, with the common at 200 after a parabolic rise is as unwise as buying a cheap qcom jan2000 500 strike (if it exists)....options are finite, entry timing is important, and historical price action must be considered...not many qcom call buyers from october to january are in a profit position, they saw gains slip away, and they actually did foolish things by attempting to roll forward and buy a new call to gain more time, a heretofore unknown repair method... you look at situations...take msft, you can buy an 0130 or 0230, and pay not that much prem to the market...you can write 80 or higher strikes on a monthly basis and scalp premiums, it has intrinsic value.....and as it is a stock replacement a mental stop should be placed...and executed... this is a fairly good time for dim calls...you mention gmst, what would an 0120 or 0220 call (if they exist) cost...what was foolish at the high looks great at the low, hence the reference to timing... do a bit of research...find a stock you like, that you believe is bottoming...pick a dim strike and expiration that when you add in the prem you are about 5% above the current stock price...buy two contracts...if the stock doubles you sell one contract and use the proceeds to exercise the second...this can be done at anytime, but sometimes better then others...you equate it to margin, and a dim allows you to leverage without margin borrowing.... don't worry about "losing the move"....if "the move" is real, it will last more then a week... hope i clarified what i attempted to last week..