[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]

RE: New positions



PureBytes Links

Trading Reference Links

Hi Guy:

I'm a somewhat simple-minded person.  I usually deliberately ignore
complicated matters.

When buying leaps, I pay a lot for the time premium.  However, if there's
money to be made, I don't mind paying more.

I have an option valuation software.  This will tell me if the options of
various securities I'm interested in are fairly priced, overpriced or
underpriced.  I used to follow the author (of the software)'s advice - buy
underpriced options.

But I find that if I filter out overpriced options, IF THE STOCK EVENTUALLY
GOES UP VERY HIGH, I will miss the trade completely and not make a cent
profit.


So gradually, I concentrate on buying the leaps of the securities I want to
invest in.  On a relative basis, I still use my option valuation software
to select the particular series of the leaps (a 60 call versus a 95 call,
for example) which is MORE underpriced than the rest of the pack.


To summarize: I don't pay attention to the time dilution factor.



Regards,

Wong
============================
At 04:17 PM 11/7/00 -0800, Guy Tann wrote:
>Wong,
>
>Good points.  I know absolutely nothing about LEAPS, so I'll drag out my
>book and read about them.  Might be an excellent trading tool.  O know with
>the actual stocks, our risk is limited to what the market does.  With LEAPS,
>I assume you have to factor in the time dilution factor.  How big a factor
>is this when looking at LEAPS?
>
>Guy