Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : General Magic -- Ignore unavailable to you. Want to Upgrade?

To: smueller who wrote (3911)	10/19/1998 11:42:00 PM
From: Mark Oliver	Respond to of 10081

<I'm looking into doing my first options (call) trading with GMGC. I would appreciate people's opinions/advice... right now I'm thinking Feb 5 or 7.5.> It's not easy to advise anyone on options without taking a wild guess on what their goals are. If you feel the price could go up 25% between now and then, you'll find no value to buying 7.5 calls at all if you plan to hold them until Feb. It could be a short term trading opportunity, but a no win hold as 6 + 25% yields a break even option, which you loose on anyway because you pay 1 1/4 for the risk and really need to make more than 8 3/4 to profit. Looking at Feb $5 calls, you'll pay 2 1/16 which gives you a break even at 7 1/16, but you'll also see much more parity in rising value as the stock goes up, or down. If the stock rises to 8 3/4 which is break even for the 7.5 call, you'll profit 1 11/16 on the 5's. So, if you are trading on inside information, buy out of the money calls. If you are less sure buy in the money calls. If you have the money, just buy the stock and eliminate the premium. No matter how you look at it, these calls aren't cheap. Why take the risk? Stock is cheap and time is on your side. All that said, GMGC can jump like a kangaroo. You can certainly profit from calls that are timely. But what's new there? Look at the options table for GMGC: cboe.pcquote.com Regards, Mark PS I think options make more sense when the base price for the underlying stock is higher. Save your options play for a $20+ stock. Don't go too far out of the money and take profits quickly when they come.