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

To: Poet who wrote (443)	5/17/2000 6:39:00 PM
From: y2kate	Read Replies (1) \| Respond to of 10876

Hi Poet, I made money yesterday on DITC calls- it was rolling between 103-112, and I rode it twice. With earnings coming out on 5/25, I think this one is good for another swing or two- definitely a buy under 100. Also got some SCMR calls, not too cheap though (!) and bought ELON at a high yesterday. But it was the first day in a long time I've made any money. I still have a lot of QCOM, including July calls that get cheaper every day. My account needs a serious repair strategy. I have to say today, and yesterday, feels like some kind of nail in the coffin. After I heard the statement accompanying the rate hike, I immediately sold most of my calls. Some are calling for a June rally, but it doesn't feel that way to me. Is anyone really making any money w/these little swings? More importantly, how do you protect your sanity in this environment? I've found myself trading trying to "get even" and I know it's not smart or really doable. What do you think of the intermediate term trading environment? Thanks, Kate

To: Poet who wrote (443)	5/18/2000 9:55:00 AM
From: Eylon	Read Replies (2) \| Respond to of 10876

Hi Poet, If we are at the bottom, now is the best time to buy calls, high premium and all. The problem is knowing that this is the bottom. Here an example of the changes in INTC Jan2000 60 leaps through the high volatility days of 10/98. The volatility and stock price are real and the option price is theoretical but close to the real number. Since INTC was at $98 at expiration I also computed gain. Intel also split once so the leap started as $120 but all number are for after the split stocks. Date, Stock price, Volatility, option price, Gain at 1/21/00 7/15/98, $42 0.35, $3.3, 1050% 10/15/98, $40, 0.57, $5.7, 567% 12/30/98, $59, 0.40, $10.7, 255% 5/3/99, $63, 0.42, $11.5, 230% As you can see, if you had bought OTM leaps at the highest volatility for Intel in 10/98 and held it, your gain would have been 567%, If you had waited two months to be sure that the market is going up and than bought it, your gain would have been about half of it. Intel actually did not went down that much in 10/98 otherwise the gain would have been a lot higher. Intel was a "tame" stock through 1998-1999. Needless to say that if you had bought OTM QCOM Jan2000 $10 leaps at 10/98 (it was then $80 leaps, and QCOM volatility was at 1.0 or 100%) at $1.5 and waited to 1/2000 when QCOM was $154 your gain would have been 9500% almost 100 begger. Unfortunately, I wasn't that lucky. So, selling option at high volatility period is a good strategy, but you may miss a great opportunity for large gains. If you think that we are at the bottom or passed it, and the market is now going up, it is also a great time to buy leaps calls. Eylon