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Strategies & Market Trends : Options 201: Beyond Obi-Wan-Kenobe -- Ignore unavailable to you. Want to Upgrade?

To: jt101 who wrote (394)	2/16/2002 1:16:07 PM
From: jt101	Read Replies (3) \| Respond to of 1064

Hi, here is a scenario I am thinking. Comments welcome. I am looking at CSCO for a bullish case. The positive points are - A lot of cash, better performance compared to LU, NT, and also taking market share from JNPR. The negative points are - lot of dilution via stock options, and high valuation. IMO, the price target for best/worst case scenario are $25/$12 respectively, for the next 10 months. I might buy only a few calls now, and if CSCO dips I might add more calls. I am looking for long side Jan-2003 or Jan-2004 strike 15 calls with ask at 4.70 and 6.30 respectively. On the short side, I am looking at Mar/Apr/July with bids at 0.80/1.3/2.15 respectively. I am not sure for the long side Jan-2003 or Jan-2004 are better, though it looks like Jan-2004 are better. Is it better to go now for Jan-2003 now, then later in summer time switch to Jan-2004/2005. On the short side Is March better or April, though it looks like March is better. If you were looking at CSCO, what months and strikes you would pick for maximum gains, with a little risk. Assuming this strategy works okay, can I hope to recover my cost over a period of a 2-3 quarters? It looks too simple a strategy, for me believe it. For all you know, I may be wrong to be bullish on CSCO, but I am looking more at option strategies here, than the stock pick. Thanks, jt