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

To: robin 187 who wrote (50215)	8/19/1998 8:41:00 AM
From: Patrick Slevin	Read Replies (1) \| Respond to of 58727

DELL First of all, there are more experienced DELL buffs here than I am. Also, Andrew Vance is a DELL maven. Member 2421668 Message 5534034 One thing I can tell you in general is that premium stripping occurs very early and quickly when a new month becomes the front month. That is to say, Monday's action in DELL (no matter which way) will see some premium coming off the options on both sides. As long as you are speculating on options you probably should get a bit more grounded in understanding volatility and pricing of options. I don't know what DELL option volatility is; I do know that experienced options traders like to buy high volatility and sell low volatility. For a couple of sites on options try cyberramp.net optionstrategist.com Also, I hope someone else here can answer your question specifically about DELL. I find I trade better when I limit my universe to only a few issues and DELL is not one of them.

To: robin 187 who wrote (50215)	8/19/1998 8:54:00 AM
From: Lee Lichterman III	Respond to of 58727

Depending on what program you are using to input the volatility factor it can change however with the exception of yesterday, DELL's volatility input for my program was 69. I basically input that number then see how my call and put computed price equates to the market price that morning and then tweak it accordingly. Yesterday the premium was ridiculous so I didn't trade it because I didn't want to risk getting stuck holding it knowing the premium was inflated and would be stripped today. The other answer given to you is correct, the premium will be stripped somewhat since earnings have been announced now, will be stripped further Monday when Sept becomes the front month, and be stripped again once the split is done. For these reasons I usually try to buy and sell the same day or within a couple days. Of course it goes against you that way too since if I had held my options from a couple days ago I would have had a 4 bagger at least with DELL pre trading at 118 right now but safe is usually better than risking a gap down.

To: robin 187 who wrote (50215)	8/19/1998 10:51:00 AM
From: Soumen Barua	Respond to of 58727

Hi Robin good morning, I have read your experience with Dell. You rolled out to Sept and closed out on Monday that was contradictory. Anyway, I also made mistakes like that in that past. However I would seldom invest 25k in one issue (in your case Dell). I would not invest more than 10k on one issue unless I am extremely positive about the move. You should have diversified your initial 25k investment. Sept calls are a little bit risky. I usually give at least two months to have a position play out. I may open a position too early. I may close out long before expiration but as you have heard from the earlier responses that volatility and premium errosion are big factors for near term options expiration. Back to your answer to Dell: I would not invest all my capital in Dell. My gut feeling is that I would do okay with this one because of the split and Dell's popularity. Would I invest in Dell? No way. I do not like it now (I would have liked it three months ago) and if I do not like something I do not invest in it even if Dell trades at $50000 per share tomorrow. I hope that answers your question. BTW you should paper trade in options before you do real time investing and consider diversification in few good companies. Also, when it comes to big capital you may consider investing in SP500 options or other index options. I like equity options because they are cheap and I like the game even if that involved big capital. Not good for your personal health and you may lose sleep worrying. Good luck with Dell (I have a feeling that you will take the risk). I like AOL rather. I've just started using the latest version(4.0) and liked the upgraded user interface. Bye, Soumen