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

To: donald sew who wrote (48771)	7/29/1998 8:44:00 AM
From: Patrick Slevin	Respond to of 58727

I started out, yesterday, believing that the market would be up in part because we were winding into the end of the month. But I'm not so certain that the effect of which you speak is not more profound on a quarterly basis. In any event, I agree that any decline should be slow to unwind, more of a stairstep affair at first. The upside I think is limited at 1142 and 1150 on the futures. I suppose the Cash should be (on average) about 5 points below that. I don't have a feel for the DJIA; just that I think the ongoing pattern of new lows will get many Dow watchers nervous.The Dow is now below the 55 dMA and the 200 day is at 8446.71, not so far below the last major low I have on June 16th, which was 8569.88 I suppose that's why Favors has the mid 8500s as a key number. If, as I think, the spoo can drop to sub 1100 then the equivalent number in the Dow would be about 8600. Lower of course, if the eventual target of 1080 (my thoughts) are achieved in the spoo. But a run-down to the 200 dMA would not be considered unusual in the overall scheme of things. It would be just about the point to start shopping for those little items like DELL and whatnot. Sure will make a bunch of people shake if it does happen, though. Anyway, I cannot bring myself to play for a Bull Trap. The market action late yesterday was too much for me...very hard to trade what with wild swings of several points in the late innings. I'd rather try to position my self properly for a pullback somehow. Which, BTW, reminds me. I hope Tom does not mind me saying this...I did not ask his permission...but he mentioned his system was leaning towards a sell signal. I don't know if he is taking it or not. Seems odd the system would say sell after the spoo just dropped over 60 points in the last 9 days, but I have to admit it does give good signals.

To: donald sew who wrote (48771)	7/29/1998 9:09:00 AM
From: Alias Shrugged	Read Replies (1) \| Respond to of 58727

Hi Don Wanted to say "thanks" for the updates you provide - always good reading. In addition to puts, I have been trying to establish bearish call spreads. On one of these frequent dips, I would buy cheap out of the money calls. If the stock rallies to the strike price, I would sell deep in the money calls (sell half the number you are long). For example, buy 20 Aug 47.5 HD calls; when (if?) HD hits 47.5 (or so), sell 10 Aug 40 HD calls. I am using this strategy only on stocks with reasonable or (better yet) inexpensive premiums but yet have decent stock movement or still have their "story" intact. This obviously rules out dell, amzn, etc. due to premiums. Stock should be pretty liquid, with decent option activity. This strategy limits your loss, in that the opening position involves small outlay of capital. (I am also trying to leg into bullish put spreads, puying cheap puts on strength as the opening position). Have been trying to buy the calls when stock is at support and buying puts at resistance (note: I said "trying" <ggg>). Finally, given the, uhhh, volatility of the market, I am planning my option trades on a stock and usually entering as limit orders the first one or two steps in the trade either before the open or by 10:00.. I don't want to get locked out of entering trades if action gets hot and wild, and I also would like to take advantage of wild swings, which pre-set trades should allow me to do. Again, thanks for all your great work. Mike