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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: Greg Jung who wrote (14944)	11/21/1997 12:01:00 PM
From: lml	Respond to of 50167

Hi-Shear Technology (HSR) has sheared high today on news of airbag contract wit Baico. Thinly traded stock; only about 6+MM shares, balance outstanding held by CEO. Check out, if interested. Subject 17045

To: Greg Jung who wrote (14944)	11/21/1997 12:21:00 PM
From: Mark	Read Replies (1) \| Respond to of 50167

Greg, re: IBM options: Thanks for your input. What I am pursuing is a strategy of buying longer term calls (3-4 months out) and selling shorter term calls against them (spread) so as to recover some of the premium paid for the longer term security. This works well in a flat to modestly progressing market but isn't great in boom times. So, if the Jan110 were a good deal at 2 5/8 two months ago and I can sell calls against them that expire worthless to recoup the 2 5/8 then in Jan they're basically free or at least I've reduced my premium exposure if January doesn't bring IBM over 110. <<After today you will be free and clear, long Jan options,right?>> Not really, remember they cost me 2 5/8 and after today I will only have collected 1/2 in premiums on expiring NOVembers. <<I don't understand why you are so concerned about lowering the premium paid, if stocks drop again you are out everything, anyway.>> Out everything versus recouping perhaps $2/contract against the original 2 5/8 premium collected? hmmmm. <<If IBM goes to 112 (a 6% move) your options will be worth $9 but you won't be able to sell them without buying back the $7 Dec115 options. >> Interesting numbers. Remember, most of this depends on your assumption about where the underlying issue will go. This strategy assumes that the market will move flat to modestly higher. If we were back in early last spring when everything went up up up this strategy wouldn't be viable. More conservative = higher probability of at least making some profit while market sorts out its direction. <<1) Next friday maybe just sell options 1 hour before closing. Should be a good rally met by a sell-down on monday.>> Why next friday? What powers your crystal ball? <<2) Stay long and uncovered and look for a big payoff day, sell at least half and buy some April puts near the end of January.>> I assume by uncovered you mean no Covered calls. Why the puts? You are expecting a drop after january? Or are you suggesting insurance? Last 3-4 months people have been buying calls and looking for a big payoff day - probably with little success. I'm looking for a more conservative strategy (originally Ike's suggestion) to keep some profit rolling in until we've established a clear direction. In this context, do your comments still hold? Thanks for your input, mark