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To: John F. Dowd who wrote (56068)	5/26/1998 1:05:00 AM
From: Erwin	Respond to of 186894

John, <<I am always pleased with the premium at the outset but of late with the techs falling into disfavor have found that I would have liked about twice as much premium. You see my stocks have been falling out of bed faster than the premium has been evaporating on the sold calls. Yeah the calls have expired worthless but so too have some of the stocks (well not worthless) but worth a lot less.>> This is a good point that has not been discussed. Writing covered calls on a stock that is going to drop like a rock puts you in the position of closing out the call or watching your stock go down the chute while you hang on to the stock to stay 'covered'. When to bail out is a difficult decision. Stop loss targets (a lofty approach) are worth consideration as much as profit targets. Erwin

To: John F. Dowd who wrote (56068)	5/27/1998 3:31:00 AM
From: Jacob Snyder	Read Replies (2) \| Respond to of 186894

To: experienced option traders: from: a neophyte, re. buying strategy. If I wanted to buy, say, 100 contracts of ZNLAT, how is the best way to buy? The open interest on these new options is only 101 today. The bid-ask is 12 3/8-13 1/8, for a spread of 3/4. 1. should I put in a market order for 100 contracts, and assume I'll get them for about 13 1/8 (if the underlying stock doesn't move too much)? 2. should I buy 10 contracts a day for 10 days, at the market price? 3. should I put a limit buy order at 12 3/4 (midpoint of bid-ask) for 100 contracts? What are the chances of getting it filled? 4. I've noticed that, on some days, no contracts are traded, yet the bid-ask still changes. How can that be? It's a market, right? So, shouldn't the bid-ask stay the same until someone new makes a trade and changes it? Or, is there a market maker who decides at what price he'll buy and sell them, even when no contracts are trading? 5. The size of the spreads seem to change a lot, from a quarter point all the way to a full point. Why the variability, and why the size (much bigger than on the underlying)? 6. Let's assume that by July 2000, INTC is at 200 :). Can I assume that I'll be able to sell my very-deep-in-the-money options, strike price 100, for 100$, plus a time premium of about 4$? Who would want to buy such a option? Is the market maker obligated to accept a sell order at the bid price? 7. If I hold the LEAPs for over 18 months and sell them, I pay 20% cap-gains taxes. If I hold the LEAPs 18 months, and then pay the strike price and convert them to stock, then sell the stock 2 months later, do I still get the 20% rate? Or do I then pay short-term capital gains (on selling price minus option cost minus strike price)? :( Sorry for the long post, but I've never done this before, and I'd like to understand things completely before I jump in.