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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: Jenna who wrote (9406)	5/13/1998 8:03:00 PM
From: Minos	Respond to of 120523

Jenna, Your AMAT options play was a great example of reaping rewards without committing big capital, although the trade is not necessarily for the risk averse. Another similar options play that I've had some luck with has been buying during expiration week the just-out-of-the-money options of a stock that is either up or down strongly on news. Often the premiums are negligible so close to expiration day and the options move tick by tick with the underlying. Plus, since the Street so often overreacts to news, the options often drift back into the money. For example, yesterday I bought some AIT puts for next to nothing -- May45s -- after the SBC merger announcement. AIT was sitting just a couple of ticks over 45 at the time. Now today it was down strongly on news of the Senate questioning the telecom deal, so I got a bit lucky. Nevertheless, there was still a good chance that AIT would have "corrected" even without the news. This strategy has been profitable for me -- if a bit risky. I'm sure others (I'm thinking OJ here) probably employ this often. Just some thoughts, -Minos