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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Lan Jaron who wrote (17283)	3/6/1999 3:53:00 AM
From: t2	Read Replies (2) \| Respond to of 74651

Lan, I did not mean to encourage you to buy options on MSFT. Buying the stock on maxium margin is also risky. You never when this stock might take a big dip in price wiping out gains. I don't think it will happen but you never know. Be carefull with any options. People have a tendency to get addicted to options trading especially when they are successfull on their first few trades. Then they keep risking more and more in options and get away from traditional, sound investment techniques. It is like the following scenario: 1. spend 5k on call options----make a profit of 5k Balance = 10k 2. spend 10k on call options-- make a profit of 10k Balance = 20k At this point you are thinking, "this is too easy and all those people are wasting their time on buying the stock" 3. spend 10k (1/2 of your balance)--something goes wrong and your investment might now we worth only 2k with expiration approaching. This is the point it gets addictive. You start thinking that the stock can't go down any further and call options on a great stock like this are a can't miss. 4. spend your remaining 10k on options again while your other purchase (above in 3.) has been a loss. So what is the outcome----either you make a bundle on such a strategy or lose everthing you put in. This is how an options addiction develops. Lucky for me, my strategies, resembling something like the above approach but in a year long scenario, were a big success. It was just luck and some faith in MSFT. I could have just lost everything. My point is that if you are going to buy options, be very disciplined and do not put too much of your cash in such strategies. Initial success could be your ultimate downfall. That is my warning to you on options. I don't recommend investing in options as it is resembles gambling more than investing. Best of luck. P.S. By the way, I personally find it hard to think April calls are not a good investment but I am not going to bet the farm on it!! I am getting over my addiction to options a lot richer, which is unusual for a gambler.<g> Actually, I am no longer an addict as I know where to draw the line.