Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets! -- Ignore unavailable to you. Want to Upgrade?

To: Sam Citron who wrote (9030)	11/30/2000 2:05:15 PM
From: Jacob Snyder	Read Replies (1) \| Respond to of 10921

That's a risk-reduction strategy that I don't like, because it gives up most of the potential upside. By the end of 2002, the stock could be a lot over 70. What I did in late 1998, when I bought longest-term AMAT LEAPs, was to also buy NVLS shorter-term puts. My plan was, if the stocks kept going down, I could sell the NVLS puts for a profit, and use that cash to buy more AMAT LEAPs, at lower prices. As it turned out, the stocks took off, and I lost everything I had put into the puts. But I made about 40 times as much money, eventually, in the AMAT calls. The other risk-reduction method I use is to buy in increments, because I don't think I'm smart enough to time the bottom exactly. For instance, in 1998, I thought AMAT would go to a P/S of 1 (industry conditions seemed as bad as in 1996, when the stock hit that valuation), but I started buying a lot higher, so I managed to get some (at what turned out to be the exact bottom, although I didn't think it would be at the time). If AMAT stays at 40 for a prolonged time, and market volatility decreases, the premiums for the LEAPs ought to decrease.