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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: neolib who wrote (200237)	6/3/2006 2:15:16 PM
From: niceguy767	Read Replies (1) \| Respond to of 275872

If I understand you correctly, the issue is one of margin. For example, if I am holding 100 in-the-money calls, will my broker allow me then to short 10,000 shares without any additional margin requirements? The answer is no. The margin reuirements for shorting 10,000 shares is the same with or without my 100 in-the-money calls with my broker. Based upon my options experience, my advice would be keep it simple. By that I mean, define the trend first...flat, up or down...then implement a complimentary options strategy. My strategy is even simpler: I'll utilize options only when I have reason to believe the trend is either up or down. In flat markets, I'll buy or short shares, and on occasion, when Dell-type situation arises, buy some very short term calls if the risk/reward stacks up. (In the Dell case, the odds were about 4 to 1 as best I could determine, while those 32.50's at $0.05 offered about 50 to 1 on Dell news...a reasonable risk given that assessment) I'll keep an eye on those July calls as we approach earnings date as a similar opportunity to the Dell news just might present itself if AMD's price drops below $30 support.

To: neolib who wrote (200237)	6/4/2006 4:34:41 PM
From: Petz	Read Replies (1) \| Respond to of 275872

neo, you spoke of a way of exiting a call position at expiration, by shorting the common, followed by purchase of the assigned shares. This would work even if the shares fell below the strike, since then you could simply purchase on the market to cover. Why pay the time premium of selling a call option as the means of exiting the position? The last sentence I don't understand. Selling any time premium is good, not bad. If there is any. I have often seen the "bid" on calls below intrinsic value when in-the-money. In that case if you tell your broker you are exercising, you should be free to sell the shares in either the regular or after-hours session. Once I unstructed the broker to use a "versus purchase" of Friday for the sale, but it did not go through that way -- it in fact was shown as a short sale that was covered by the assignment. Petz