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Technology Stocks : EMC How high can it go? -- Ignore unavailable to you. Want to Upgrade?

To: robin 187 who wrote (4723)	3/8/1999 4:11:00 PM
From: SJS	Respond to of 17183

Robin, I don't like to buy calls, and wind up selling covered calls and selling puts (espcially in EMC) because it is much more profitable, I did this spread for the fun of it, just to keep the senses sharp for trading. However, in real terms, I lost a bundle on the 100 strike calls because of the huge erosion I experienced. I bought those calls for about 6 when the stock was at 102. That's a huge premium. It was mitigated by the sale of the 115 (at the time) and further mitigated buy the sale of the 110 (today). So the spread is very profitable so far ($2 commands 10 points, or $10), but I know that both I and the writer made out on this one (so to speak). I think your strategy is sound, except for one thing: Do you have upside and downside goals for this trade? If EMC moves up sharply like it did today, I would leg into a bull spread to further reduce your risk, and lock in a profit. You might even make it a "credit" spread if you play your cards right and can sell "short" side for more than you paid for the long. That's the sweetest deal. You get paid no matter what...(and still command a point spread...) I guess what I am saying is that as an option buyer, especially in this stock, the premiums are huge. I don't want to pay them, so I sell them, and the risk. I'd advise moving quickly with your option trades in general, so the premium doesn't erode OUT of your pocket, especially as a buyer of options. Eventually, you'll become a seller of options and see what I mean about taking in more money.... Regards, Steve