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Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: Redhead who wrote (8183)	8/29/1998 1:30:00 PM
From: LTK007	Read Replies (1) \| Respond to of 29382

Well I know enough that the calls on DEC20s amounts to about 1.5 million shares,and that it's price has been going up from 1/16 to 1 even as market is tanking---could be shorts taking making a massive hedge position,but don't know--Max

To: Redhead who wrote (8183)	8/29/1998 9:24:00 PM
From: JoeinIowa	Read Replies (2) \| Respond to of 29382

Red, Here is my favorite option site: cboe.pcquote.com This shows all NEM options. Some really interesting volume on friday: There was some very large volume on the Sept. 27.5's, and Mar 32.5's. The Mar 20's were also up. Are there any rumors to a takeover? I've suspected that with gold so depressed and gold stocks down there will be some consolidation. Much cheaper to buy than to dig. Jose

To: Redhead who wrote (8183)	8/30/1998 7:49:00 AM
From: ChrisJP	Read Replies (1) \| Respond to of 29382

Hi Redhead ! Based on some of the posts here, on Doug R's 56 TA thread, and some of James Strauss' posts, I think CNBC will have a slightly different view of "the on-line community's" perspective on the markets. BTW, you may want to look into selling calls and buying puts to "frame" or "collar" your investments. I did this in Nov when things were correcting and it helped me sleep much better. Here's the way it works (all prices are hypothetical): Let's you own 100 shares of ABC trading at 100. You sell Oct 110 calls for $5/share. You immediately pocket $500. At the same time you buy Oct 90 puts for $5/share. You use the $500 you got from selling the calls to pay for the puts. So your out of pockets costs are $0 ! One of 3 situations can happen. Situation 1: The market takes a dive -- ABC now trades below $90 Before options expiration in late Oct, you sell your puts at a much higher price, offsetting the amount of money you lost in ABC stock. You can buy back the calls if you want to, which are practically worthless (.25/share). The bottom line is you were protected from the drop. Situation 2: The market makes a stunning reversal -- ABC now trades above $110. If ABC share price goes over 110, the option buyer has the right to buy your stock. Your puts are almost worthless, but you can sell them if you want to. You can either buy back your calls when you see the reversal coming, or you can sell your ABC stock at $110. Remember you made 10 points on the stock and 5 points on the call. 15% profit in a month or so is pretty good when you thought you were gonna lose money. Situation 3: ABC trades between $91 and $109. Both you calls and puts become worthless. No harm done. You don't have to sell calls on you stock if you don't want to, they just help pay for the puts. (which in even a medium sized portfolio could cost several thousand dollars) Hope that helps, Chris