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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Robert O who wrote (24880)	10/5/1998 4:18:00 PM
From: Jacob Snyder	Read Replies (2) \| Respond to of 70976

Robert: OT re options: re: "the problem with options is that their value deteriorates so quickly." The loss of time value in an option is near zero, until the option has less than a year till expiration. Most of the time-premium is lost in the last 6 months. That's why I've decided to only buy the longest-term LEAPs, and sell by 6 months from expiration. That way, I still keep most of the time premium. I will use shorter-term put options as a way to hedge my long-term long positions. In that case, I'm not really trying to make money, just decrease risk. re: "it's the usual game of screw Joe Lunchbox" Yes, of course. They are trying to make money, any way they can. But there is no point complaining that the playing field isn't level. The useful thing to do is figure out what the rules are (fair, unfair, or unstated rules), and play the game to win. That means using rules of engagement that maximize my strengths, minimize my weaknesses, on a field of battle I choose. In the short-term, it's a zero-sum game, me against the professionals. re: "A market order is suicide and only an option if you MUST create or liquidate a position." I am never in a position where I MUST do anything. I've noticed that decisions I make in a hurry are consistently worse than decisions I've come to after long thought. Waiting and watching is usually my most profitable activity. Yes, I'd be interested in your book notes. Actually, I think the large bid/ask spreads on options, compared to stocks, are at least partially justified. Let's look at my trade today: according to CBOE, 106 ZPJAH have traded today. 100 of those were my buy. So, the market maker is sitting on at least 94 unhedged options. He would like to buy them back from someone, make his money on the spread, but he hasn't been able to yet. I got them as the underlying stock exactly touched its 52-week low. If the stock goes up from here, the market maker will be forced to take a loss, when someone eventually sells those ZNLAT back to him. His risk is worth a spread of 1/8 point, which is all I paid (bid was 3 3/4, and my buy order filled at 3 7/8).

To: Robert O who wrote (24880)	3/9/1999 9:17:00 AM
From: Jerome	Respond to of 70976

Robert O, Concerning Options...<<O T>>, You are correct in stating that market orders for options are usually disasterous. Some of these market makers in options make used car salesmen seem like nice people. What I do is figure out in advance what I want to do. (covered call, long or short) what I hope to achieve and the most reasonable way to get there. As soon as my options are filled at a limit price I immediately place a sell orders GTC at my determined price. Even then I wonder what I was smoking when I entered certain positions. When it works out it makes you feel like the smartest person in the sanitarium. Good option plays today look like LSI, ADPT, ADI and ASYT. Regards, Jerome