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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Boplicity who wrote (7256)	10/11/2000 11:52:44 AM
From: Voltaire	Read Replies (1) \| Respond to of 65232

Hi Greg, good question, I am presently in RMBS, EXTR, QCOM, INTC and ELON. See absolutely no reason to exit any. MY PROBLEM IS WHEN TO BUY MORE! With me it is a matter of FAITH. Got more EXTR today and have bids in on all the rest. Going to play golf and laugh. Watch what happens this afternoon through Friday. selah, BOTTOM HAS BEEN HIT. V

To: Boplicity who wrote (7256)	10/11/2000 1:56:45 PM
From: RR	Read Replies (1) \| Respond to of 65232

Hi Greg: EXIT STRATEGY... I could not find the posts that I had written on this awhile back that I mentioned to you. Let me give you some of my thoughts again. Excuse the typos, as I'm no typist and hate to type. This could be a long answer, but I'll try to be brief and to the point. If you have any follow-up questions, then let me know. 1. Remember that I do only options. I'm not LTBH. Consequently, you must consider that in my comments. 2. If a play goes wrong, I get out quickly. With options, when the position turns against you, get out now... immediately. The big question of course is when do I consider a position as having turned against me. 3. When I view a position as turning against me, I have to consider a number of variables. While some set an automatic percent target, like if the position goes down X% they are out, I do not do that. The main reason I don't is because of the volatility. Some of the positions can have large intraday swings. If you set the stops too tight, you get closed out of course. So, I will consider the time element, like I normally buy options 4-6 months out, what the Naz is doing at the time, the underlying stock reaction, it's chart, etc. in evaluating if a position has turned against me. For example, I'll be more flexible with an option that has months to go until expiration because it has time to recover. Like my JDSU calls in March. While JDSU is down considerably, I believe JDSU will recover nicely by then. I'm not as inclined to close those March calls out. However, my Dec JDSU calls have been getting stopped out for several weeks. You may recall that I left town about 4 weeks ago. When I leave town or am away from the market for the day, I usually set stops for protection. Preserve capital is rule 1. Anyway, I set some stops to protect my profit. JDSU got clobbered that day and I lost a lot of my calls being closed out but I preserved my capital and what little gain I had in them. It happened again a few days later and I lost money, first time since spring. I was not convinced the position necessarily turned against me so I took that money and bought more March calls a few days later. 4. I look closely at the channel chart for the underlying stock. I think you do the same. Let it break down and my comfort level gets questionable quickly and I am more prone to close the position unless, again, I believe the underlying will recover and have time on the options to allow the recovery. I'd study the reasons for the stock to break down as well, like is it moving with the Naz or is it a sector rotation, stock news, etc. all of which will be factors to consider to judge recovery and likewise my consideration of whether the position has turned against me. 5. Now aside from all the above, I usually will look very closely at getting out, even if it is temporary, if my position loses about 35%. That may seem like a lot on options but again, some of the intraday swings can be more than that in one day regularly. What I usually look for in that regard is a sustained level, meaning that if there are indications that the stock will not recover and establish an upward trend in the time frame I want, then I consider the position as having turned against me and I get out immediately, i.e. QCOM earlier this year when I told the Porch I was getting out. 6. I favor the hot sectors, so when I do hear some potentially bad news being reported in my issues, I perk up and will be much more cautious. Sometimes, I'll take that as a warning and consider that the position has turned against me before it is even reflected in the stock, i.e. DELL from my DELLHEAD days. Greg, difficult question to answer, especially typing all this stuff out. I'll probably think of something additionally afterwards. Should you have any questions, let me know. Rick