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Strategies & Market Trends : Tech Stock Options -- Ignore unavailable to you. Want to Upgrade?

To: MonsieurGonzo who wrote (31092)	12/12/1997 3:05:00 PM
From: Tom Trader	Read Replies (2) \| Respond to of 58727

>>Your play was OEX open bounce (to ~459) to 455 selloff. Being new to all this, I was curious as to what the (probably many) reasons are why one would short CALLs rather than purchase PUTs. << Hi Steve--the reason that I shorted the calls vs buying puts was because although this was a day trade, it was one that I was willing to hold overnight. Now given that we were looking at December -- with one week to go--going long the puts would mean deterioration in premium very quickly so that even if I was right about the direction of the market and held on to the positions over the week end, it may not have worked out well. As an aside--I have decided that even when I take position trades in the OEX -- as apart from day trades--I will in future sell puts and calls as opposed to buying them. I normally take a position in the OEX --as a position trade when I get a signal to reverse my position in the futures. Now the premium is so large that -- if I sell the OEX option, generally 15-20 points -- that between the time value decay and the trade going in my direction I stand a good chance of making money on most trades--unless it turns out to be a really bad signal. The risks are that if it is a bad signal I need to be ready to cut my losses--which I know I have no problem doing. The other thing is that the margin requirements are huge at least at Schwab but that is not a factor at this time given my currently fairly liquid status. Also if it turns out to be a huge move my profits would be limited on the options -- but then I know that I will fare well on the futures. Hope this responds to your questions.