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Technology Stocks : IFMX - Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: bob zagorin who wrote (10605)	5/1/1998 12:33:00 AM
From: Michael G	Respond to of 14631

I know nothing about puts and calls so I won't even comment on that subject. However, being the optimist that I am, I believe Informix will hit $12 tomorrow. Then there will be profit taking and it will slide and hold around $11, possibly rising to $12 again on good news of new partnerships, etc...It will hold there until about end of July when next quarters earnings will come out. Then it will hit $15, possibly $16, and slide and hole at $14-15 for another three months, and continue the cycle, ending up at $18-$20 by year end. I know some people in one of the regional sales offices and they are very excited about what 1998 holds in store. We'll see tomorrow if I'm a soothsayer, or full of it. Can someone answer the earlier question about after-hours trading. I've read it here before, but I seem to have lost my bookmark. Good luck tomorrow everyone. Michael

To: bob zagorin who wrote (10605)	5/1/1998 12:47:00 AM
From: James A. Shankland	Respond to of 14631

Bob, you're right. My principal points were: (1) When writing calls, "losing the stock" (i.e., being assigned) should not be one's principal concern; you can generally cover the option position, albeit sometimes at a loss; and (2) if you roll your in-the-money calls into fresh, out-of-the-money calls toward expiration, even if it's at a loss, the underlying stock will have to do incredibly well for you to lose any money at this in the long run. Case in point: my most successful holding over the last year or so has been CSCO. During that time, CSCO has about doubled (i.e., annual return was 100%). I have had call options written against CSCO the entire time. I lost on some option trades, and won on some; and I never "lost the stock". Over the year, I still eked out a modest net gain on the option trades; plus, of course, the 100% return on the stock. If CSCO had done less well, I would have done better on the option trades. And anyone who thinks CSCO is going to earn a 100% annual return indefinitely is not sufficiently familiar with the miracle of exponentiation. Anyway, this is now way off-topic from IFMX. Mea culpa; I'll say no more on it.

To: bob zagorin who wrote (10605)	5/1/1998 2:07:00 AM
From: Robert Graham	Respond to of 14631

Do not forget volitility of the stock and rapid time erosion of the premium, both of which are on my side. Now this may not be enough to keep me from a loss, but time will tell. Also I see a resistance level ahead when it breaks from 10 that may work to my advantage. Allot of this is timing with options, both agressively writing the CCs like I am, and in particular, purchasing the option. If this stock runs to 12 and stays there, then I am in trouble, even though it may come right back down after expiration. You are right the risk to reward was different before earnings announcement. But I did allow for the possibility of earnings being positive even though this does place me in a position thatis not desirable. We will end up seeing what happpens. Bob Graham