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

To: Joshua Corbin who wrote (27112)	12/22/2000 8:15:52 PM
From: jmac	Read Replies (2) \| Respond to of 65232

No, if you bail out and have a loss $59,000 versus a loss of $10,000, I'd take the loss of $10,000 any day. Options are clearly a much better way to play a volatile market with hindsite has stocks falling 50% in less than 30 days. You folks are missing the point. It's leveraging your pot of money by buying many more options that you could of an equivalent amount of stock that gets people in trouble in markets like this. It worked great in the mo mo markets of 1999, it worked equally poorly in the market of 2000. But, let's take your example a little futher. You bought the options when jdsu was at 100 and you lost $10,000. Or, you held the stock all the way down to 41. You pooint out you have a paper loss of $59,000 but you are holding thinking it may go back up. Let's say it does. It goes all the way back to 100. So, you break even. Instead, you decide jdsu has bottomed and you spend another $10,000 to buy more calls on jdsu. it goes back to 100. Your profit is somewhere in the neighborhood of $50,000 versus breaking even. In a spiralling down market, calls are better than stock as long as you don't leverage. it's just that simple. But, most option players you options to leverage and that's how they lose it all.