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Microcap & Penny Stocks : Bid.com International (BIDS) -- Ignore unavailable to you. Want to Upgrade?

To: Crazy Canuck who wrote (16580)	4/5/1999 5:16:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 37507

Crazy, FWIW regarding your rule... A rule I try to follow when buying calls is to ensure that I buy them with the strike price as close to the current price as possible - and with a expiration date as far out as possible. This strategy does not give you the maximum leverage that buying more inexpensive calls that are way out of the money - and close to the expiration date, will provide you. I have traded options for about five years now, generally on the long side either by buying calls or writing naked puts. Call buying is risky business and as you probably know it's easy to lose your money. I have found that buying deep in the money calls can be a much better strategy. An option has maximum time value at the strike price and diminishes in value on either side. Sooo, by buying a call with none, or very little time value at 1 or 2 strikes in the money provides a buffer if the stock were to gap against you and time value comes back into the option. Second, I bought many OTM options in my early days, and can't tell you how many times I watched a stock move 5-10 points to only produce a point or two gain in the option. By buying with minimal time value, as the stock moves up, it moves almost point for point with the stock. I agree with your strategy of buying out a couple months...especially when purchasing minimal time value....the further out they are, the more of a buffer you have if the stock gaps against ya. regards, sf