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Strategies & Market Trends : Giant LEAPs... -- Ignore unavailable to you. Want to Upgrade?

To: taylorfife who wrote (300)	3/4/1999 11:07:00 AM
From: PashaBear	Read Replies (2) \| Respond to of 315

Buying LEAPS on AOL, EMC and ATHM is essentially like buying a leveraged version of the underlying security with a time limit - so it largely depends on the strike price and cost of the contract, as well as what you think the stock will do in the time period. It is not, as I indicated, my LEAP strategy, which is to buy out of favor technology stocks (these three are very favorite), but it might work well. Have you had a look at "Options As a Strategic Investment" by McMillan, to get a sense of the various components of an option's value? With short term calls, it seems to make most sense to buy expensive close to the money contracts, but my experience with LEAPS is that if one is planning to trade the contracts (rather than exercise them) cheap out of the money works best. PB