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

To: MileHigh who wrote (18472)	4/2/1998 10:20:00 PM
From: Ian@SI	Respond to of 70976

OT Option Volume Milehigh, As a WAG, I would suggest that the internet has played a role in increasing option volume. Options may be used to increase leverage (both upside and down) as well as to reduce risk. Until recently, sophisticated information on trading options was, as you suggest, restricted to professionals. That's no longer quite as true. Good books are available (MacMillan On Options for one; Trester is another oft cited author). Websites and current option information, quotes and analysis are available to individual investors. And there are some quite attractive strategies. For example, I sold some PUTS on SVGI which, if exercised will obligate me to buy SVGI near its book value and near an alltime low for PSR. If the option expires worthless, I keep the premium. Both outcomes, IMO, are positive. While I'd like to own the stock at the specified price, I don't mind just keeping the premium and trying again. Other option strategies appear equally attractive. However, I haven't paper traded sufficiently to develop the confidence to use more complex strategies. The other factor is that some mutual funds are using a variety of option strategies in an effort to beat the market return. One fund sticks to the blue chips, selling Calls for 10% higher than current price each quarter. If exercised, they buy back and sell more calls. Otherwise they just sell more calls. Ian.