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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: upanddown who wrote (32621)	9/17/1998 10:19:00 AM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

John, I bought some Jan 125s when it popped over 130 on Tuesday morning. I usually buy one or two strike prices or 10% out of the money puts and calls when I set up a position. In this case, I bought one strike out, which is fairly tight and relatively high cost for me. My basic reasoning on strike prices is that I am buying puts on stocks that I believe have major downside risk. So, I opt for more contracts and less probability of scoring. Many people go the other way, buying at or even in the moneys, as I also do once in a while. This IBM trade was sort of in-between. The reason I played tight with IBM is that I have had several decent winners with the stock in the past year. This one so far has fit the pattern Picturetel, Merrill, Chase and Micron took with my puts. The trend has been and will be down, big time, but it is a downward move filled with many short term rallies of some power. So, I am willing to pay up for the puts to capture a quadruple at a shot instead of playing for 1000%, all in one swell foop. If I am wrong and it gives me 1000% all at once, I won't cry. <G> Also, I still have a third of Oct 100s that I rolled down to in the last move, so if it gives me the BK, I have some bullets in place. My typical put result is for the stock to kill me for several weeks, sometimes months, forcing me to add thirds at higher prices and perhaps suffer some expirations. And then collapse in a heap. Citicorp, Ciena, Ascend, the XAL, Presstek, S3, C-Cube, the IIX, Shiva, etc. all worked that way. And that is one reason why I go further out in time than most option players. Every once in a while I get one like ISSI that totally collapses 5 minutes after I buy my puts. The only problem with that is the nasty phone calls from the SEC. <G> MB