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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: tsyl who wrote (58135)	8/14/1998 12:32:00 AM
From: William C. Spaulding	Read Replies (1) \| Respond to of 176387

If this argument is correct, then outside of the predictable premium erosion of Sept options, would not the Sept's increase substantially within the same time frame due to option buyers moving out of Aug options, thus increasing Sept volume, volatility, etc. No. It is true that many call holders will roll their Aug options to Sept options, but you forget that more Sept calls will be written once the Aug options expire, thereby increasing the supply of calls and lowering their price. Remember that there are both buyers and writers of calls. The Sept. options have the earnings premium in their prices now (though not as much as the Aug calls) which will disappear after earnings are reported. Also, Dell almost always declines toward the end of Aug, so that will further decrease the value of Sept calls, and then you have to add the normal time premium decay as Sept expiration nears. The best time to buy Sept calls will be right before Labor Day weekend or right after. I expect Dell's next surge in price to occur then, but, as I stated earlier, since it will fall before then, it won't be much higher than it is now. The only profitable, though risky, option trade now is to write calls. I would say puts, too, but if Dell doesn't report excellent earnings, it might drop like a stone, so there is additional risk there. If you write Sept calls to get the higher premium, then just make sure that you close your position before Labor Day. I don't think it is possible for Dell to rise considerably this month, if only because of market conditions. It's hard to tell how the Russian situation is going to affect the market, in addition to the other factors being cited for market weakness.