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Strategies & Market Trends : Ride the Tiger with CD -- Ignore unavailable to you. Want to Upgrade?

To: E. Charters who wrote (92422)	9/20/2007 8:35:12 PM
From: koan	Read Replies (1) \| Respond to of 313641

Well, EC my fine feathered friend, nice to see you back and are still alive. Lets examine your statement: And let me preface it by saying usually I want wts deep in the money or with lots of time, but this looks like a special gold breakout case---still, here is the logic. Also, wts are very dangerous until you learn how to use them. I would recommend newbies to use the K B wts good until 2011. E Carters: "ah yes! leverage against loss. Of course if gold falls, you lose ALL your option money, whereas you only lose 10% of your underlying security value." Same difference, right-lol? Lets say you have $100,000 of gold stocks like Kinross-lol. Or you have 18,0000 wts controlling $100,000 of Kinross at the money. I only paid .25 or so, but lets say you paid .45 or $8,000 for the 18,000 wts. Good until dec 5, striek $15. Now lets say gold falls well, $75, I will bet your $100,000 worth of Kinross will fall further than $8,000 (the limit of your loss). But let's say gold fall $200, then Kinross will fall much further than your $8,000. But with the wts you are limited to the $8,000 loss and with more time, less still. Still wts are very dangerous until you fully understand them and that can take a long time, so be careful. And that especially mean you EC-lol.