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Strategies & Market Trends : Tech Stock Options -- Ignore unavailable to you. Want to Upgrade?

To: Patrick Slevin who wrote (45203)	6/7/1998 10:50:00 PM
From: jjs_ynot	Read Replies (1) \| Respond to of 58727

I use a combination of stock and options. The 20 percent figure is what I use to set the risk reward balance point for option pricing. I don't think you can get there on stocks alone since the best the S&P have ever done in a month is about 6 percent and once you have enough stocks to avoid specific company risk ( at least 5); you rapidly revert to the market mean. The central limit theorem still holds. Thus, I feel you need to be using options/futures to get that kind of a number. I just wonder if I have set my balance point in risk/reward too high or too low?