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

To: Knighty Tin who wrote (46719)	2/12/1999 4:44:00 PM
From: Tommaso	Read Replies (1) \| Respond to of 132070

I am a pretty slow learner with options, having never traded them before, but one thing I have figured out is that with these expensive LEAP puts you do best being satisfied with a quick gain of 40-50% if you can get it. The reason is, of course, obvious: the higher the price goes, the further the stock will have to drop before any buyer can expect a profit. So if you buy a LEAP put at 40, the stock drops and it goes to 60, any buyer would have to expect an additional 60-point drop to be totally sure of just breaking even. And this is after the drop that sent the option up. So unless it goes way into the money (which it could) you'd do well to cash it in and spend part of the money buying something lower priced. Which is in fact what I have been doing. The only really expensive LEAP I still own is an AOL 130, which is not all that far out of the money and seems strangely undervalued--probably because AOL is in fact a steadily growing money-making enterprise. But a P/E of 365 keeps it on my grossly overvalued list. I now realize that my idea of holding for capital gains was radically wrong. But nevertheless am doing OK, with the whole portfolio up something like 25% in less than six weeks during a period when the NASDAQ kept making more more new highs. I hope to edge out of this gambling den and bank the money, and wait for better opportunities to go long some time in the next 3-4 years. May hold some YHOO and AMZN and MU LEAPS in hopes of a collapse of their stocks back towards the lower levels seen in 1998. OK! What I have I overlooked this time?