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Strategies & Market Trends : Point and Figure Charting -- Ignore unavailable to you. Want to Upgrade?

To: LWolf who wrote (2618)	4/26/1998 10:29:00 PM
From: Ms. X	Respond to of 34809

Hi Laura, I'm glad you signed up for the free trial. Let me know how I can help you learn. :-) First, I want to talk about options. You will hear many philosophies and approaches to purchasing options but I stick to one golden rule: Always buy in the money (at least $5) and the expiration must be at least 3 months (prefer 6) out. This takes away the evil premium that can work against you. I know the argument, they cost more, but it costs you far more if the premium runs out on you and you are left with worthless options. Never buy more contracts than you would round lots of stock. In your current situation, this is what is happening. The premium is eating away at the value. DLJ: Just broke a double bottom after being unable to break resistance at 104. The daily momentum just turned negative. There has been overall weakness in this sector. My guess is the stock will continue down. This comes from the daily momentum and because the market risk is so high. It may move up after the split (depending on the market) as some stocks do, but I don't have a crystal ball. DLJ is in a sector that will be sensitive to interest rate hikes. Currently the market is a little nervous about this which I think is warranted given certain P&F indicators. The market overall is very extended too. I can't tell you exactly what to do. Did you buy the options to purchase the stock or for just an option play? Buying options can be very rewarding, you just have to know exactly why you purchased them and what your plan is. Stop points, holding to expiration etc. Buying on splits can be profitable but you still want to make sure you have things stacked in your favor. P&F can help you with this. I couldn't tell you the amount of times I made mistakes. I tried to not let it scare me and used it as a learning experience. Best of luck, Jan I am