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Strategies & Market Trends : Point and Figure Charting -- Ignore unavailable to you. Want to Upgrade?

To: Jorj X Mckie who wrote (10600)	12/1/1998 5:18:00 PM
From: Judy	Read Replies (3) \| Respond to of 34808

Leaps can be a vehicle for long-term investing for leverage or hedging. In this case they are serving as a surrogate for stock since I feel the market/sector context is conducive and the stock is ready to start a sustained move in the few months. For instance I have comfortably held CSCO leaps while the stock moved 30 points and will decide whether to take profits or exercise them after Feb earnings. If one enters leaps at a good price point on the proper stock, one can sometimes sell 2/3 of the position and apply the profits to exercise the 1/3 remaining position to obtain free shares. An example to show the power of leaps with approximate numbers ... suppose one bought 3 Jan 2000 leap calls at strike 60c for 15 (which could have been had several times this year). Let's say CSCO reaches 100 in Feb-Mar '99, those leap calls would be worth about 49. One could then sell 2 leap calls and "call" away the remaining 100 shares of CSCO for 60. Essentially, your shares will be paid for by the leap profits. Just one way to step into building a portfolio. "Options as a Strategic Investment" is a good reference, by Lawrence G. McMillan. Thorough discussions of strategies such as synthetic longs, bull spreads, ratio-writes. One can play with options, but it is consistently more profitable to learn how to use them as vehicles for leverage and hedging.