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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Phillip C. Lee who wrote (12315)	4/29/1998 8:37:00 AM
From: Linda Kaplan	Read Replies (1) \| Respond to of 213177

Phil: I think David has a good point about the advantage of leaps. (Well, you know I have some, and now they are at a loss. If I had more cash I would average down on them at this point.) There are some advantages in call options, in that you have so much more leverage. You put less money in and control more shares. So, for example, you can pay $11250 for 1000 shares at a strike of $20 in the year 2000. Calls like this will move almost point for point with Apple stock because they are in the money. The premium is currently $3.75 for the two years. That premium of course will diminish as the time before expiration diminishes, so that $3.75 per share can be lost, but except for that you will get value that moves pretty much with the price of the stock. So you tie-up less money and control more shares. You don't have to hold all that time, of course. If you feel Apple has peaked, you czn sell the options and can buy back when you feel that it has based again. It's true you have the taxes to pay, however, but you can perhaps make more money because you can buy more than twice as many calls as shares. On the other hand, Apple stock is marginable, so you can get 50% of their value in buying power! Ergo, the advantage is not as great in options as it seems. You have to pay twice as much cash to buy options, which are not marginable, as you pay to buy Apple stock, assuming that you USE margin. If you do not use margin, you have the far greater advantage in buying options rather than stock. Linda