To: Andrew Vance who wrote (13599 ) 5/4/1998 9:00:00 PM From: Andrew Vance Respond to of 17305
*AV*-Robert-I was trying for the May40s but barely missed out on them. BigBro may have the play of the day, even though he paid too much for them by going with the May50s. Considering the premiums involved, I like the May40s for tomorrow. however, I strongly encourage you to seek the expert advice of Judy on this subject. I would bow graciously to her expertise. Between her input, my considered play, and anything Tech Master has to offer, you should be able to hone in on a good play tomorrow. Right now, if I target $30 as the eventual price for tomorrow we have May35 at 2.375 May40 at 4.0 May45 at 6.0 May50 at 8.625 My play was and will be finite dollars and not finite contracts. given this approach and using $17.5 K as the basis of investment, I get 73 May35s 43 May40s 29 May45s 20 May50s A play to $30 on the stock with no premium attached would yield $36,500(May35), $43,000(May40), $43,500(May45) and $40,000(May50) gross proceeds which the initial approx $17,500 needs to be deducted. Any move through $30 and below would net the following additional profits $7300, $4300, $2900, $2000 per point. given that I have targeted $30 as the final price, the May40s appeal to me the most since it has a wash profit at $30 with the 45s and beats the 35s for initial payback. Obviously a drop below $25 makes the 35s the best deal but you have to pick a target price you think the stock could move to. IF the drop goes to the lowest level like $15, I was obviously foolish not to try for the $146,000 payday in the first place and have to settle with a second place finish of $107,500. The key here is that I think I might be able to more readily acquire 43 contracts on the May40s than 73 contracts on the May35s without affecting the bid/ask with the clincher being that the May40s wil have a 30% higher open interest. These are my random thoughts for tomorrow. Things may change slightly as we approach the open and as the CBOE manipulates the bid/ask on these options. And for those of you reading this thread for the first time that wonder why I would divulge this play prior to the open and possibly screw myself out of a decent trade by virtue of others that might line up to do the same thing, my answer is simple: Someone asked and I was able to answer their question as most of the members on this thread here would. We are not in competition with each other nor does anyone want to make a profit at the expense of others on this thread. If the options play above becomes a nightmare because people have jumped on board at this particular PUT and there is a mad dash by this readership, then I hope they will redo the numbers to see if it is worthwhile as I will to make sure it is still a good investment. I am sharing a plan that is fluid and affected by upcoming events early tomorrow so it is nothing more than a thought process and a baseline rationale. And finally, this thread is based on helping each other. I made my play today and I know there will be others coming down the road. Our readership is small enough that anything shared here will not dramtically affect the overall scheme of things. We do not go out and spam across the internet, have advisory letters or services where we try to entice people to invest AFTER we take a position, and we hardly ever cross the boundaries of other threads on Silicon Investor.