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Technology Stocks : Adaptec (ADPT) -- Ignore unavailable to you. Want to Upgrade?

To: Bald Man from Mars who wrote (3206)	7/27/1998 2:02:00 AM
From: Pawel Achtel	Read Replies (2) \| Respond to of 5944

If you don't have enough $ you could then construct a synthetic long position which is equivalent to owning the stock, but at a lower. To do that you sell the puts and buy the calls at the same strike price. The strike should be as close to the stock price as possible to lower the investment. Your equivalent exposure would be then almost 100% equal to owning the same number of shares of the underlying. My problem in buying calls is that if the implied volatility is > 50% you end up paying a fortune for the time premiums. But, it may be a right strategy for this dude now, who knows. For example, if you were buying calls for YHOO in the last year, probably 80% of times you would double your investment every month. Another idea for ADPT would be a time spread. Say, sell Oct $15 calls and buy Jan $15 calls - assuming it will be "dead money" for the next three months. If the stock goes slightly down by Oct - you should still make a little money; if it trades sideways till Oct - you make money and if it goes up you also make money. But, if it goes up after Oct you may need a bigger truck to get your profits back home 8-) You said earlier that you would like this pup at a single digit. Well, shorting the $10 put would guarantee you just that or you will make 100% gain (the premium) otherwise. Because I would be happy with either - this is my strategy. Also, your downside is less then owning the stock. Cheers, Pawel