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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: sea_biscuit who wrote (114012)	2/22/2002 1:07:40 PM
From: Wyätt Gwyön	Respond to of 152472

the cboe lists free quotes (delayed) for LEAPS and other options. here's qcom's quote.cboe.com the puts are in the right hand column. if you scroll down to where it says "04 Jan 30.00 (LLU MF-E)", that is the put contract with a strike price of 30 expiring in Jan 04. the quote i am looking at lists the last trade at 8.30, the bid at 8.10, and the ask at 8.40 (generally you would buy close to the ask and sell close to the bid). that would give you the right to sell 100 shares at a price of 30 while the contract is valid. in this instance, if you bought one contract at the ask, it would cost $840 plus commission (for some reason the quoted prices on equity options are just 1/100 of the actual price of a contract), and would give you the right to sell the stock at a price of 30 any time up to expiration in Jan 04 (if you wanted to close out before Jan 04, typically you would just sell the put back on the market instead of exercising, because there would still be time premium left in it). i don't really like puts due to the expensive premiums: the breakeven at expiry is 30 - 8.40 = 21.60, which is more than $10 below the current price (i wrote this when QCOM was around 32). in order to just get a double, the stock needs to fall another 8.40 to 21.60 - 8.40 = 11.20. i personally prefer to just short, although i also prefer to be short an index like the QQQ rather than a particular stock. so far it looks like 30 is the lowest strike price (i wouldn't be surprised to see lower strikes come out soon, though). i believe the LEAPS for 2005 will be issued in a couple more months. the cboe has some good basic info on options in their "learning center". also, Harrison Roth wrote an informative book on LEAPS. i would probably read that book before getting into LEAPS. Caveats: i am no expert and the above information may be wrong is no recommendation to do anything. jmho