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Technology Stocks : Identix (IDNX) -- Ignore unavailable to you. Want to Upgrade?

To: Buck who wrote (4971)	11/12/1997 2:34:00 PM
From: ed doell	Read Replies (1) \| Respond to of 26039

Hi, I'm not J.Saf, but what you ask depends upon some key factors: Ask yourself, what is your motivation for entering options. As in chess think ahead several moves, because options are just that, several moves ahead. Make that clear first to yourself for your own peace of mind. Options are derivatives and certainly have something to do with the underlying stock, but they are also an entire world of their own with their own language, math, and people. May I suggest "Options as a Strategic Investment" by Lawrence McMillan as a must read if you are considering options now or in the future? Ask yourself some questions: What is my intention with puts? That is, do you want to put the stock to someone at some price or do you want the stock put to you at some price? Maybe you want to write (sell) an in the money call on a rally? What do you anticipate the stock doing? What is your strategy toward that? If you fear the stock going down further but still want to hold it, "shorting to the box" is a useful strategy to consider in that it preserves your NAV entirely. Be sure to have clarification from your broker beforehand as to the scenarios and their implications when you choose to unleg your box. Some brokers handle unlegging boxes differently from others. Particularly when/if margin is involved. You can also short the stock without shorting to the box. There are distinct advantages to that over shorting to the box depending on your broker's anticpated handling of scenarios. But it has a similar effect on your NAV. Right now, Buck, most puts have so much VIX (volatility) built into them due to the recent down turns in the market that buying puts is a dear endeavor. Selling them is attractive, but the set aside in your account given this market and the tone of IDX recently may not be of interest to you. I hope I've helped. I'm watching my various game plans today with not much happening right now so I thought I'd write you a bit on the topic. Ed

To: Buck who wrote (4971)	11/12/1997 5:54:00 PM
From: Hockeyfan	Read Replies (1) \| Respond to of 26039

Current options? First of all, I am not a stockbroker and anything I say is only my opinion. You should definitely play your first several trades on paper. The general rule of thumb is to sell volatility when it is high and buy when it is low. IDX's volatility measure used for options pricing has always been very high, the calls more than the puts. If you think IDX has hit rock bottom the best options trade would be to sell March $7.5 puts at 3/8. These options have implied volatility of 66% vs. 22% for the S&P500. The option holder will not put the stock to you (make you buy it at $7.50 per share) unless the stock goes below $7.50 between tomorrow and 3/20/98. You must be prepared to buy the stock at the discretion of the option holder if the stock price falls below $7.50 (actually $7.25ish do to transaction costs.) This would be a better trade if IDX hit $8.50 or so. Your premium would be higher and you could feel stronger that we hit rock bottom. I would not sell calls now in case we rebound to the middle of our trading range - $10 to $10.50. Only buy options with high volatility if you are CERTAIN the price will move in your direction.