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Technology Stocks : WDC/Sandisk Corporation -- Ignore unavailable to you. Want to Upgrade?

To: Road Walker who wrote (24405)	12/23/2003 1:29:53 AM
From: limtex	Read Replies (1) \| Respond to of 60323

JF - What makes you so sure that Institutions have much better info than we have? These are the same institutions that sold this stock down to single digits not so long ago. The "bubble" word again How do institutions know how much flash is going to be required next year or the year after. Institutions are quite conservative and they tend to work on the Missouri principal...ie Show Me....but show me doesn't work in this game since you have to put up first. What do you mean SNDK has overperformed. How do you know it hasn't underperformed? What is it makes $4 per sahre next year or at the rate of $4 per share. Are you suggeting that people shouldn't be allowed to buy stocks whose historic P/E rise above a level that you consider reasonable? Should it be illegal for individuals to pay over a certain P/E? And while we are at it should it be illegal ot pay over a certain price for a painting or a super bowl ticket? Come to think about it market economies are a little difficult from time to time so lets abolish them too. THat is how to really stop "Bubbles" once and for all. Stalin never had a bubble. L

To: Road Walker who wrote (24405)	12/23/2003 10:00:52 AM
From: Art Bechhoefer	Respond to of 60323

John, as you and many others probably know, the use of options to enhance a position in a stock in most instances carries more risk than simply buying and selling the stock. The only exception is the sale of covered call options, where the risk comes only from the loss of potential profits if the stock continues to rise. But the sale of put options carries only one risk, namely that the investor must be prepared to buy the shares at the striking price, which may be above market value when the put expires. That risk is finite, and in addition, it is lessened by the amount received when the put is sold initially. Furthermore, if the expiration date is at least three months in advance, the put option has a premium attached to it that gradually disappears as the expiration date approaches. This also lessens the risk. Anyone who trades options must sign a form acknowledging that he or she understands the risks inherent in options. No one can buy and sell options without having signed that form. The one type of option trade that carries the highest risk is the sale of naked call options, which is a strategy that should always be avoided. Trading options also involves paying much higher commissions than one pays for a stock transaction of similar size. That's one reason brokers love their clients to trade options. To compensate, an investor can generally do better selling covered calls or selling put options with expiration dates three months or more in advance. Another problem I've seen when people trade options is failure to make a trade when the stock price is advantageous. Thus, one might have considered selling covered calls on SNDK when the stock was in the 70's or higher. But selling covered calls when it was in the 60's or lower would be counterproductive. Conversely, selling puts on SNDK when the price had dropped to the 60's would be justified, particularly because of the strong balance sheet. Finally, probably the main problem that investors may face when trading options is failure to take the money and run when running is still possible. On a few occasions, I've maintained an open position on sales of covered calls and puts right up to expiration. But most of the time, it is advantageous and less risky to close the position well beforehand--specifically, after a significant short term move. This means the investor has to monitor the stock price constantly. If an investor prefers to be less active, then options of any kind are an undesirable option. Getting back to SNDK itself, I have seen nothing particularly earthshaking, other than in central California. Art