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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Michael Berkel who wrote (81)	1/3/1998 12:14:00 PM
From: Roger A. Babb	Respond to of 18691

Michael, I can't advise you on specific investments but can only give you my thoughts and let you make your own choices. With 10k to invest I would not put all of it in any single investment. All though each of your choices have good potential, the options have the possibility of expiring worthless or of being very valuable. The BROC investment could lose part of its value or be very valuable and does not have an expiration date like the options. Here is what I would do in your situation, but not necessarily what you should do (ie make your own best decision): Invest 1/3 in BROC long Invest 1/3 in another long of your chosing (or money market) Invest the remainder in either or both of the call options This strategy would still leave me some marbles to play with if the market goes against me. Good Luck. Roger

To: Michael Berkel who wrote (81)	1/7/1998 8:11:00 PM
From: Fernando Saldanha	Respond to of 18691

Michael, you can avoid the "timing" issues with options by creating synthetic short positions. If you buy a put and sell a call with the same strike price (and expiration date) you create a synthetic forward (to the expiration date) short position in the stock. The position has no "convexity" and no time decay (you do not win or lose with the passage of time, if the stock price does not move). Your P&L in such a position should be approximately equal to that of a short position in the stock, with one advantage, however. If you short a stock the broker does not pay you interest on the cash you have received (except if you are an institutional investor or if you are "big"). When you do the synthetic short you do get paid (although this is not obvious). Best regards.