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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: Curtis Brown who wrote (6934)	3/18/1999 12:50:00 AM
From: musea	Read Replies (2) \| Respond to of 41369

Curtis, You wrote: I think your leaps are a wonderful plan with many companies like WCOM, WMT and others. Please share more info. GO AOL, isn't this nice! Let me start with a disclaimer. I think I do a pretty good job of fundamental analysis (certain exceptions exist, of course :-), but I am no expert on options. I am not sure that my LEAPS "strategy" is all that good. I have been reading (O'Neill, etc.) and I see what look like much better strategies, should one want to really do the options thing. I tend to not be able to watch the market carefully at various times through the year so I use strategies that might be pretty pedestrian. I think you should do your reading before plunging in. Basically, I buy several out-of-the-money LEAPS calls if the premium is small enough relative to just buying the shares. When the calls go up in value I sell enough to pay for the rest. In my limited experience my calls have all doubled in value eventually, so I've sold half of them. I now have no money at risk. If I want the discounted shares at expiry, I can exercise the calls and if I want to take my profits, I can sell the calls. What I've done is exercise the calls. I'm not convinced that this is better than just buying the shares, except that I soon have no money at risk. Margin can be bad for folks who don't keep an eye on the market, so buying the shares on margin feels risky to me. The idea is that by the time the calls expire, I will have enough cash built up to buy the shares. In the few cases I've tried, the share prices were at least double the strike prices in all cases. You have to choose the companies carefully. I've stuck to the big tech gorillas. -musea