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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Lee Penick who wrote (13536)12/17/1997 9:27:00 PM
From: Tito L. Nisperos Jr.  Read Replies (2) | Respond to of 70976
 
Lee, I sold my stocks and bought LEAPs (Jan '98 30) at 4/share when the stock was at 23, just above the bottom at 22 3/4. The LEAPs were worth more that 80/share 9 months later this Aug for a 1900% gain. Actually I began selling the LEAPs at 12 and sold the last at 23/share, using the proceeds in short-term Options---a move I did not regret because I gained more than 1900% in the process...Looking back, I could still have gotten a respectable return by taking a 9 month vacation instead of trading everyday...(If I used margin to double the shares, I would have gotten a mere 742% minus margin interests in that time frame)



To: Lee Penick who wrote (13536)12/17/1997 10:49:00 PM
From: Jacob Snyder  Read Replies (1) | Respond to of 70976
 
Lee: you're right.

That changes the results. If the stock doubles, then the margin strategy and the LEAPs (Jan.2000 calls @30 strike price) end up with almost identical returns. In-the-money calls still make more money, at less risk. If the stock triples, then the LEAPs do quite a bit better than margin, 46K vs. 39K. Thanks for catching my error.


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