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Strategies & Market Trends : Options for Newbies -(Help Me Obi-Wan-Kenobe) -- Ignore unavailable to you. Want to Upgrade?

To: ---------- who wrote (811)	4/22/1998 3:04:00 PM
From: Shawn M. Downey	Read Replies (1) \| Respond to of 2241

Doug and thread, I sold SEP98 50 Calls against my Gateway 2000 stock on March 25th for 4 7/8. They are now in the money by 7 1/4 and the SEP98 50's are selling for 12 1/8. Any suggestions? I know I could: 1. Let them expire. My avg cost for GTW is about 25 so there is lots of profit anyway. 2. Roll forward. The C DEC98 50's are 12 1/2. The C JAN00 50's are 17 3/4. 3. Roll up. Only a C SEP98 55 is available for 7 5/8. 4. Roll up and forward. C DEC98 55's are 9 3/4. C JAN00 55's are 16 1/8. 5. Buy to close the position. I Think I am going to miss this stock if it goes. Thanks for any advice, Shawn.

To: ---------- who wrote (811)	4/22/1998 3:58:00 PM
From: Walter C.	Respond to of 2241

Doug. Thanks for your answer. For a follow-on question on the example you used in your answer, what is the difference between simply "rolling" and "rolling using a spread"? I think I am having trouble grasping where the "spread" is in your example. Thanks again. WalterC

To: ---------- who wrote (811)	4/22/1998 7:58:00 PM
From: ----------	Respond to of 2241

Good question If it weren't for bad luck, I'd have none. Whenever I roll an option I enter it as a spread. That way both sides are executed at the same time. My order looked like this: buy 10 puts dell March 150 Close Customer sell 10 puts dell August 75 Open Customer Net Credit 3 1/2 The order is only executed when both sides can be done AND I have $3,500.00 (less commissions) coming my way. I figure if I sold the AUgust puts first, Dell would go chapter 7 and I'd be on the hook for double the amount. If I bought back the March puts, Dell would soar, and I wouldn't get squat for the one's I wanted to sell. The ONE thing my experience has taught me is IF I try to guess what the market will do, it will do the opposite. By entering the roll as a spread, I am eliminating one more thing that can go wrong. Doug