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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: freeus who wrote (104600)	2/24/1999 4:28:00 PM
From: Chuzzlewit	Read Replies (3) \| Respond to of 176387

Freeus, I used to coach a college chess team. I used to tell the players to sit on their hands until they had fully analyzed their moves. That idea extends to options as well. Before you buy or sell an option consider your strategy in the event that the stock goes up and if it goes down. Know in advance what you intend to do, and see if it makes sense. Mark Peterson also gave some good advice. Use options as a hedge against your position, and so the focus of your analysis has to be on the total position, not just the option. When you sold Dell 85s for around $2.75 and Dell was at $80, you were in effect buying Dell at $77.25 and agreeing to sell it for no more than $85. That transaction capped your gain at around 10% for one month, which is equivalent to a 215% annual gain. And that's if your shares get assigned. That is what you threw away with a premature "repair". To do as well, the long holder would need to see DELL at $88 at the end of the month ($80 + 10% of $80). And I haven't mentioned the fact that your break-even point is lowered from $80 to $77.25. That is how you need to think when you hedge with options. TTFN, CTC