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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (43737)	1/18/1999 11:17:00 AM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

T, Let me lay my philosophy of option buying, puts and calls, Leaps and regular, on you. It works for me and most folks reject it, but here is my thought. An option in any form is a wasting asset. If time and movement is not on your side, you lose all of your pure premium. So, you will definitely lose 100% of your pure premium when you are wrong. Therefore, you have to aim at making much more than 100% when you are right. My personal goal is a quadruple with any option I buy, recognizing that probably half and maybe more than half of my contracts will perspire worthless. That being said, I like to get as much potential for as little money as possible. That is why I own few Leaps. Yes, your Leaps are more likely to make money than my April 40s, but let's say they are five times as expensive. That means that for the same amount of money, I get four more chances to adjust my MU position for a shot at a homerun. If the stock goes to $200, as Niles says, <VBG>, my strike price at that time is not likely to be $40, while yours is stuck at $50. It comes down to a probability of making some money vs. a shot at making lots of money. I use the 90/10 so I can opt for the latter. Different strokes for different folks, but my system certainly works for me. Hope yours works for you. MB