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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: bob s who wrote (29542)	7/4/1998 12:26:00 PM
From: Knighty Tin	Respond to of 132070

Bob, I am not ready to play Amazon yet. I still think they have a few more dim bulbs to sucker into the stock before it hits. Buying puts can be very rewarding, especially with an overpriced trading sardine like this one, but it can also be very frustrating. AMZN has Presstek written all over it, and I have chronicled my trials and tribulations on that one. Yes, I eventually made a 600% profit on all the puts I bought. But it took a long time and I lost a lot of premiums before it came true. And if you only make a 600% profit with a stock that drops from $200 to $50, you know you started playing the game too soon. <G> AMZN has that feel to me. It looks like a pure short squeeze with little basis in reality. Another way to play the bearish side takes advantage of the premiums. For example, short the rich, rich $125 strike price calls and buy the $130 calls. If the stock goes down, even temporarily, you collect a lot of pure premium as the at the money call shrinks in value. The negative is you spend a lot on commissions, your broker has a cow unless you have done this sort of thing before, and it is still a loser if the stock goes up tremendously from these nose-bleed levels. You also do not get homerun types of returns. Lots of singles, few homers. And with a stock that goes up this fast, the strike prices may not be there when you need them. MB