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Strategies & Market Trends : Option Trades -- Ignore unavailable to you. Want to Upgrade?

To: scotty who wrote (524)	1/22/1998 12:49:00 AM
From: RSAMBER	Respond to of 2341

Scotty: Thanks very much for your input. I pretty much agree with your advice re: buying near the money. My primary reason for joining SI is to learn as much as I can from you and the others while developing my own ideas on playing with stocks. I also hope to occasionally stumble upon and post some useful information. My (limited) research indicates that DEEP out of money options need a lot of help to pay well and become virtually worthless in the face of "incorrect" stock movement. I have been charting daily stock prices and their affects on the various options. Despite the printed word of the experts and your findings, I have reason to believe that a somewhat out of money option can pay more than an at money option after a (for example) 10 point favorable move. This assumes equal amount of cash is laid out in both cases (ie. $1000 buys 2 $5 puts or 5 $2 puts and in several paper trading exercises I scored higher with the 5 $2 puts) This theory -actually all of my theories- are in their infancy. I suspect that I will find that many things which hold true in some situations will fail to work the same in other seemingly similar situations. I also suspect that I will come to agree more closely with your findings as time goes by. THANK YOU again for attempting to steer me in the right direction. I heard you and I believe you but at the same time am not ready to completely abandon my pet theories. Ron Samber