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Strategies & Market Trends : The Thread Formerly Known as No Rest For The Wicked -- Ignore unavailable to you. Want to Upgrade?

To: Junkyardawg who wrote (3996)	12/27/1998 12:16:00 PM
From: Glenn	Read Replies (1) \| Respond to of 90042

WWW.DLJDIRECT.com should have it all for you. Smiles, glenn

To: Junkyardawg who wrote (3996)	12/27/1998 12:18:00 PM
From: Glenn	Respond to of 90042

That was a quality post. You're a lot better than you make yourself out to be. Smiles, Glenn

To: Junkyardawg who wrote (3996)	12/27/1998 1:31:00 PM
From: Mr.Manners	Respond to of 90042

you can also check here just change the symbol at the end of the string for whatever stock you want edreyfus.com

To: Junkyardawg who wrote (3996)	12/29/1998 1:39:00 AM
From: Millby2000	Respond to of 90042

JYD, Another option (sorry about the pun) to buying a put option in what you believe to be an upcoming down trend is to do a bear call spread. This is where you buy and sell two different call options of the same month with the idea that the stock will decrease in value by the expiration date, to a point that your call options will expire worthless. For example, Micron Tech (MU) closed Thursday at 52 1/2. The Jan 50 call options were 4 3/4 and the Jan 55 call options were 2. You could sell 10 contracts of the Jan 50 and receive a premium of $4,750 and at the same time buy 10 contracts of the Jan 55 for $2,000. The difference ($2,750) is the amount you stand to gain, if your are right and the stock falls to $50 or less by the third Friday in Jan. The nice thing about this strategy is you have zero cash outlay (vs. buying a put - if you bought the put instead, you would cough up $2,250 in this example, to buy 10 contracts of the Jan 50 puts). By the way, your broker will probably require that you maintain an amount equal to your exposure in your margin account. In the above example it would be the difference in the two strike prices 55-50 = $5 or $5,000 for 10 contracts - less the $2750 premium you collected - or $2,250. With a bear call spread, there are three possible outcomes - 1) MU drops below $50 on Jan 15. The Jan $50 call options are worthless at this time (because, who would exercise a $50 call option when they could buy it at the market for less than $50?). Result - you keep the $2,750 premium you collected on Dec 24. 2) MU closes at exactly $50 on Jan 15. Same scenerio as above, you keep the $2,750 premium collected previously. 3) MU goes against you and shoots up to trade at $60 on Jan 15. Now you are in deep do-do - or are you???? The Jan 50 call options that you sold to somebody for $4,750 will be exercised, guaranteed, on Jan 15. You could buy the Jan 50 calls back at $10 (diff between 60 and 50) or $10,000 and at the same time sell the Jan 55 call options that you bought for $2 ($2000). These would sell for $5 ($5,000 for 10 contracts on Jan 15). With these two transactions you would be down $5000 - but remember on Dec 24 you netted $2,750 by buying and selling the call spread. So now your loss is $2,250. This is similar to buying the Jan 50 put for 2 1/4. If you are right and the price falls, you keep the difference in premium, without putting up any funds up front to do it. If you are wrong and the stock increases in price - take your $2,250 loss (same amount you were willing to give up by buying the put option), but if you feel the price of the stock is still going to fall, but you didn't have enough time - buy and sell the Jan 60 and 65 call options for the next month - collect your $2750 - $3000 and wait for the next expiration date. By the way, you can buy back the option you sold at anytime before the expiration date to relieve yourself of the obligation of selling at that price, if the market is favorable, you don't have to wait for the expiration date. Guess what you can do if you believe the market is headed up - how about a bull put spread! Happy investing! Steve