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Technology Stocks : CMGI What is the latest news on this stock? -- Ignore unavailable to you. Want to Upgrade?

To: Chas who wrote (4981)	2/26/1999 9:56:00 AM
From: HG	Read Replies (1) \| Respond to of 19700

Chas, Options can be very dangerous. They provide leveraged buy and/or selling opportunities and your gains can mutiply because for the same amount you can control more shares....but that may be a terrible thing too, as your losses can multiple just as much as your gains. With at the money options (ATMs) a $1 drop in stock price can mean a loss of $100 - 500 per call (easily) - which can be killing...and 'm not even taking the time primium into account - which decays as well... I'd advise you take professional advice from a broker - it will be more aligned with your goals. I generally buy/sell LEAPS - used to be Jan 2000 but now that it is close (!) I go in for Jan 2001. I go out around $20 on the stock price and stick to the leaders. I plan to hold them until I start losing money on them or till the stike price = the price of the underlying security...unless of course someone puts them to me first...and that is always the possibility. If LU were to drop to 70, someone may actually force me to buy the stock at 120 ! That s the main risk - that and coming up with that money. I would have to sell other stock, which is an opportunity cost - or the price may be temp depressed... Buying Power is the cash+margin in your account. How much you can buy. You need to have that buying power BEFORE you sell the put. And then, it is treated like a short sale, so your account value actually diminishes if the stock is going up. For accounting and balance purposes, they do not factor in the fact that you can buy them back at and make money. Hope that helps.