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Strategies & Market Trends : Your Worst Trading Enemy.. You -- Ignore unavailable to you. Want to Upgrade?

To: RobQ who wrote (211)	2/6/2001 10:50:04 PM
From: KFE	Read Replies (1) \| Respond to of 223

RobQ, Did I miss a way to "hedge my bets" on my long term holding without dumping the shares? Option strategies can be constructed to hedge just about any position. Constructing option strategies that will be profitable if the underlying stays the same, goes in desired direction, or goes slightly against the desired direction make up the bulk of my trading. Keeping with the theme of the thread these favorable risk/reward option strategies are possible because of greed and fear on the part of traders which cause some options to be overpriced vs. others. I believe that all equity traders can enhance their returns by understanding options. For example, you might want to short a stock that can't be borrowed or uptick/upbid rule is preventing you from shorting. You can do a synthetic short with options by selling a call and buying a put with the same strike and get the same profile as shorting the stock. I have found trading options easier emotionally than equity trading because it is just a mathematical exercise. Regards, Ken

To: RobQ who wrote (211)	2/7/2001 4:57:46 AM
From: shawnwolff	Respond to of 223

I agree RobQ I think its unwise for "trader types" to be holding into big earnings. I recommended "trader types" to wait and possibly enter sympathy plays in the same sectors, long if good, short if bad. I am both a "trader type" and an "investor type", so I had to make a decision about longer term stuff too. That's a more complicated decision. All these questions went through my head.. Will the market shrug off bad news as it has recently? Was a disappointment already factored into CSCO's current price? How do I feel about the risk? How exposed am I? How strongly do I feel that the market has found a bottom? How do I feel about a recovery in the latter part of the year? I decided to take some gains, reduce some exposure, and I can always re-enter after the dust has settled. That's just me though. I think we all have risk-thresholds, and we have to find what those are. I think part of the psychology of trading is learning to make objective decisions, right or wrong. There is no room for hindsight. - Shawn