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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: FR1 who wrote (4708)	11/11/2001 12:25:51 PM
From: mishedlo	Read Replies (1) \| Respond to of 99280

I think most of the average players are just gambling because there is no way to know with any certainty which way the stock will move. That has to hold true for common as well. Can anyone guarantee me which way a stock will move. There were people buying, holding AMZN JNPR JDSU all the way down. Leap puts would have been a great play. Leap calls would have been a 100% loser. But holding common from 150 or whereever on JDSU until now is also nearly a 100% loss. JDSU will never see 100 again and even if it were someone could buy it now for next to nothing. If a stock moves then common will move as well. Let's say I want to buy 1000 shares of XYZ but instead buy a call option. XYZ falls 50% for whatever reason. I am sure the person buying calls would be better off than person buying common. This assumes one would have held to the bitter end, but perhaps something just drops overnight 50%, like IRF did this past summer. At any rate, if there is an expected trend for some period of time (like Zeev is calling for next year), then leap calls would be quite conservative. But yes, I agree, one must pick his spots carefully. In a sideways market, advantage is clearly to the option seller. In a strongly trending market, advantage is to the option buyer. Also there is a theoretical unlimited loss potential on shorting. There is a known loss limit on options. Another possible use? How about put protection in front of earnings if one wants to hold long term but is afarid of the current quarter. I intend to buy some leap calls in Dec, if Zeev can just talk this market down one more time. M

To: FR1 who wrote (4708)	11/11/2001 1:03:30 PM
From: Timetobuy	Read Replies (2) \| Respond to of 99280

They have usefulness. I buy large blocks of deep itm options with time if I want to exercise the stock later in a market that I think will go up significantly. When the time approaches, I sell part of the options and use the money that I made to exercise the other shares. I also buy shares, but if I really want a significant position and I'm pretty confident of the valuation and move several months out, the leverage of the deep itm option gets me the shares at a price that's locked in now. I use DEEP itm options because there is usually little premium even with time left on them. (I don't typically buy leaps). Of course, if I'm wrong, the option is going to move one for one with the stock. That's why I'm careful with entry points and always buy time. Short term is speculation. Nice move on brcm. Never thought of playing a stock that way, but I'm not one to use margin either. What leaps are they? The recent highs of spring were around 50 or so. If it breaks above there, you're probably going to see prices much higher than 60. Unfortunately, I sold my brcm shares at 30. Sigh. I guess I'll have to pay more for them if it ever does decide to pull back.