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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Big Dog who wrote (17157)	11/30/1998 6:13:00 AM
From: ForYourEyesOnly	Read Replies (1) \| Respond to of 18056

Y2K Plays for Gamblers: Thanks for the feedback! Is Big Dog a "betting man"? Looks interesting to THC..... It appears that some other big players are using gold to make the same play: "John Brimelow's friend, John Dizard, had a scintillating Y2K-gold piece in the New York Post on Sunday. The essence of the story is that gold coin sales are booming because of that fear of a nightmare Y2K problem. But the tip off of things to come may be Dizard's revelation that there is a 3.2 million ounce ( 90 tonne ) call position ( option ) for the December 390 gold contract. To put this in perspective, the coming January call options in toto are about 20 tonnes. We are talking about $390 gold here- not $290. Someone (s) is expecting a substantial gold rally for some reason before the end of 1999. We know that the reason is fear of a Y2K disaster brewing. And these fears should grow and grow as 1999 matures. " Looks very interesting indeedy..... THC "An IPS Special Report: Crude Oil "Strips" June 1998 Way back in November of 1995, our Options Edge Hotline recommended buying the December of 1997 $20 crude oil calls, then going for about $380 apiece, at the New York Mercantile Exchange (NYMEX). The following month, subscribers to Richard Maybury's Early Warning Report read the same recommendation for $450 or less in a Special Market Alert. Subscribers of both publications who bought these options were well rewarded when crude oil rallied from $18 a barrel to over $25 just months later. The December 1997 $20 crude call rallied to as high as $2000-a 426% return on our original investment. Now, more than two years later with crude trading under $13 a barrel, we like the long side of crude again. Although it's impossible to predict when the price of oil might rally, we can use options to establish limited risk positions for as much as eighteen months into the future. Classic Dilemma Crude oil option investing has a classic dilemma built into it. Spot (or cash) crude oil responds much faster to price increases than the more distant delivery crude oil. Pressure on the spot oil will move the nearer term options to a greater extent than longer term options. Option buyers, however, like to buy for their staying power. How can we get the best of both worlds? Strips. Although this term is usually associated with interest rate instruments, we can fine tune it to our needs. To construct a strip, all we do is buy an option for every six months in the future. Right now you can buy the following options for a little under $1600: Strip Options December '98 $19 crude call $500 June '99 $21 crude call $550 December '99 $22 crude call $500 Total $1550 Prices are subject to market moves and are constantly changing. Last updated: 24-June-98 Three Advantages This strip does a few things for you. Number one, it allows you to profit from a general price increase, whether the strength comes in the "front" or "back" months. Secondly, it allows you the luxury of selling off your most profitable options while still "staying in the game," combining the best of long and short term options. Thirdly, it gives you a highly leveraged position in an extremely volatile market while your absolute risk is limited to less than $2000 plus transaction costs. Bullish factors for crude oil are numerous The Gulf War sent crude oil prices reeling to $40 a barrel. With the emergence of Alexander Lebed as the probable next leader of the Soviet Republics, the continuing crisis in Bosnia and the unpredictable transfer of power by the Saudis at the King's death, the bullish factors for crude oil are numerous. Call your commodity broker now to discuss current prices on the crude oil strip. You cannot trade NYMEX crude oil options through your stock broker. These options are traded on a commodity exchange and therefore you need a licensed commodity broker to buy them. If you do not have a commodity account, contact Sue Rutsen at Fox Investments at 1-800-621-0265 or write her at Fox Investments, 141 W. Jackson, Suite 1800A,