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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: GVTucker who wrote (173204)	2/27/2003 1:13:46 PM
From: tcmay	Respond to of 186894

"The disincentive goes the other direction, too. "Let's say, for example, that an Intel holder in August of 2000 wrote some 65 Oct calls when the stock was in the low $60's. In that same month, the stock reached more than $75. A holder who might ordinarily sell above $75 might hold and wait to sell until those Oct calls expired. "By the time those Oct calls expired, though, the stock was under $45. And even if Intel performs very well from now on, you most probably won't see $75 for anther decade and a half." Ironically, the closest I have come in the past several years to writing some CCs was when Intel was at or near it's all-time high. I was carefully scrutinizing the LEAPs and seeing quotes like (just an example, as I don't recall the exact numbers) a $10 premium for a $70 strike price exercisable a year out, e.g, a JUL01 80. Greedily, my thought process was "If Intel stays about where it is now, I get $10 a share on my entire position. And if Intel goes up and I get sold out at $70, I'll have effectively sold out my entire Intel position for $80, which I can happily live with!" But I didn't, and I rode the stock down. C'est la vie. This is not my argument that I "should have" written the options, as I never argue based on hind-sight. (Knowing the hindsight picture, the ideal would have been to sell huge amounts of uncovered calls, or buy puts, or sell all of my shares and buy puts. But of course nobody knows in advance the hindsight picture. A more conservative strategy might have been to sell at around $60, when many of us were scratching out heads and saying "These prices are insane!" But, of course, we probably all know folks who "got out" at other prices also considered "insane." One guy I knew at Intel got out at some insane price like $80...but that was in around 1990, so it's about a dollar or two in today's shares.) I believe options are basically an example of "market timing" (speculation) instead of buying based on long-term trends (fundamentals). Except for the valid purposes of options for reducing risk and volatility (as with farmers selling options on grains), or the lesser use for generating income (when explicitly needed, which is not often), most who buy or sell options are betting on short-term price moves. If they bet a stock is not going to move outside a narrow range, they write CCs. Those who buy the CCs are betting on a price increase. If they bet a stock is going up, they should buy calls (or sell puts, though riskier if they're naked). Or buy the stock. If they bet the stock is going down, they should buy puts, or sell CCs, or sell the stock. This is all basic option theory, as you know, which I'm not much of an expert on. (I bought one of Jack Schwager's books a decade or so ago, though most of my Call buys and sells were in the mid-80s; by 1987 I had pretty much stopped doing options.) The big picture on options is not hard to figure out. It's basically a series of bets on short-term price moves, which I think is wrong-headed (except for those doing it for valid risk reasons, as farmers do). There's a reason it's called "commodity speculation." --Tim May

To: GVTucker who wrote (173204)	2/28/2003 8:01:42 AM
From: Amy J	Read Replies (2) \| Respond to of 186894

Hi GV & Thread, Bush may win the battle, but we could lose the war: "Pentagon warns reporters; B-2 bombers get orders" cnn.com Unfortunately for us, Bush doesn't seem to understand international politics. He's risking our long-term future safety by not being appropriately strategic when taking care of the Iraq issue. (Strategic as in, the USA could have used Intelligence instead to handle this matter with Iraq.) A country that maintains a "not attack first" policy, best maintains future long-term security & safety for itself. The worse thing the USA can do to itself, is to do a so-called "pre-emptive strike". This risks our future safety. While Bush calls it a pre-emptive strike, the international countries perceive it as dangerous, threatening, and uncontrolled. As other countries' GDP's grow, they may have increasingly more power, say 30 years from now. By violating a basic international policy (of not doing a pre-emptive strike), it almost guarantees a future power may justifiably argue they can do a (so-called) pre-emptive strike onto us. At a minimum, it encourages an increase in arms race. He may win Iraq, but he may lose our future security. Scary. " North Korea raised further tension after reports on Friday it was preparing to start reprocessing plutonium and test a ballistic missile." Well, duh. A very normal reaction to Bush. Bush may call it "pre-emptive", but the international community views it as, "attack first." And it doesn't matter if the international community is wrong or right, our future security is more dependent on international perception. Clinton had the skillset to wipe out an Arabic pharmaceutical company, and yet still maintain the respect of the Arabic people. He is using up a huge, huge chip with the international community on Iraq and borrowing on the future ability for the USA to call on the international community for assistance to secure our safety in the future - on matters that need attending. Not a strategically low-cost method to deal with this. Regards, Amy J