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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: McNabb Brothers who wrote (12310)	8/2/1998 11:31:00 PM
From: Roger A. Babb	Read Replies (2) \| Respond to of 18691

Hank, thanks for the lesson on selling naked calls. I think a key point here is that your calls are well out of the money. It is looking ugly in Asia tonight and I expect Monday will be ugly here. The question is if "buy the dip" will save the day or do we go down from here?

To: McNabb Brothers who wrote (12310)	8/2/1998 11:41:00 PM
From: Roger A. Babb	Respond to of 18691

Hank, a little over a year ago we debated which y2k company to short. It didn't matter, they all crashed. Then we debated which helpdesk company was most overvalued (RMDY and such), it didn't matter, they all crashed. Then it was I2 versus MANU, again it didn't matter, they both crashed. Recent discussions have focused on the Internets such as YHOO and AMZN, it is safe to predict that the entire sector will crash and the choice of which to short won't matter! We have received a lot of flak from the longs for bad choices made on this thread. But time has proved us right on each sector so far. The laws of economics have not been repealed for the Internets, their turn will come too.

To: McNabb Brothers who wrote (12310)	8/10/1998 12:14:00 AM
From: Rob S.	Respond to of 18691

Great observation. Most people think in terms of BUYING calls and puts. I think the prejudices the prices to be a bit higher than the probability of the stock move. When you sell either one, as you aptly pointed out, the time value works with you instead of against you. Then if you see the move going against you to the point that you think it makes sense to bail, your chances are much better to escape unscathed. Selling puts on distressed stocks that you wouldn't mind owning if they got put to you also makes a lot of sense near stock bottoms. Amazon.con now has a pretty good resistance level that should show up around 125-135. I doubt it will move to the 140 level anytime soon. But if it moves toward that level and the TA looks favorable, then hedging against that resistance level should be beautiful. The more times these Amazongonenuts.com fools speculate this stock up to that level, the more it's like taking candy from a baby.